NNA applauds Small Business Expense Protection Act introduction
National Newspaper Association (NNA) today cheered a bipartisan group of senators who are out to correct the Treasury Department’s decision that Paycheck Protection Act recipients cannot deduct their payroll costs.
Led by Sen. Charles Grassley, R-IA, five senators announced that they believed the intent of Congress in passing the CARES Act, which contained the PPP program, was to preserve liquidity for small businesses, not to increase their taxes. They introduced the Small Business Expense Protection Act on May 6.
After the CARES act was passed, the Trump administration announced that if businesses used the PPP to pay employees, they could no longer claim those payroll costs as regular business deductions. The result was that businesses would then have to pay additional income taxes in 2020.
Grassley said that was not what Congress had in mind.
“When we developed and passed the Paycheck Protection Program, our intent was clearly to make sure small businesses had the liquidity and the help they needed to get through these difficult times. Unfortunately, Treasury and the IRS interpreted the law in a way that’s preventing businesses from deducting expenses associated with PPP loans. That’s the opposite of what we intended and should be fixed.”
Sen. Thomas Carper, D-DE, a co-sponsor, said, “Delaware small businesses that are the backbone of our economy have been hit hard by this unprecedented pandemic and need relief now.”
Sen. John Cornyn, R-TX, also criticized the Treasury Department rule.
“This legislation would erase any confusion by clarifying that expenses paid with a forgiven PPP loan can still be deducted,” he said.
Sen. Ron Wyden, D-OR, called the Treasury rule a “gut punch.” And Sen. Marco Rubio, R-FL, said, “Businesses should not be penalized by new taxes because they sought help during this unprecedented crisis.”
NNA President Matt Adelman, publisher of the Douglas (WY) Budget, said it was gratifying to find bipartisan agreement on the tax issue.
“Cash is going to be extremely tight for small businesses this year because of the nearly nationwide shutdowns. Businesses in our communities need to be able to keep their money in their pockets so they can reopen their doors and support their staffs as they try to move back to full functioning. This new tax from the Treasury Department was a mistake, we thought, and we are glad the senators are moving to get it corrected.”
Contact: Tonda Rush, email@example.com