Relief appears to be on the way for small businesses concerned about getting taxed on their Paycheck Protection Program (PPP) loans.
NBC Connecticut Investigates told you earlier this month about a surprise many businesses were discovering just as they started closing out their books for the year.
Chris Goslin struggled for weeks to get a PPP loan for her Groton hair salon.
Then she found out recently the IRS would not let her deduct the PPP money she used for expenses. Like many small business owners, Goslin normally deducts them.
After our first story about Goslin and the PPP tax issue, a lot of people did not express sympathy on social media, wondering why she should be able to deduct expenses that weren’t paid for out of her pocket. Goslin‘s point was that small businesses during the pandemic need all the help they can get.
She said her salon was forced to close by the state for more than two months.
A Connecticut certified public accountant said in fact it was the intent of Congress to allow small businesses to deduct these expenses paid for with PPP money.
“For many of these guys it’s a big number. You have to remember that these small businesses, they spent that money, immediately to help their employees,” said Ryan Sheppard, of Knight Rolleri Sheppard CPAS, LLP.
In fact, in the stimulus bill awaiting President Trump’s signature there is a provision that people like Goslin who got PPP money will be able to deduct expenses paid for with PPP money.
“This comes as a great relief to me”, Goslin said.
Two of the biggest supporters of this change applauded its inclusion in the stimulus bill.
Republican Iowa Senator Charles Grassley, chair of the Senate Finance Committee, said, “Reducing unnecessary tax and regulatory burdens attached to PPP funding makes sense and is the right thing to do...”
Democratic Representative Richard Neal of Massachusetts, chair of the House Ways and Means Committee, said this move, “…will both incentivize the hiring and retention of workers.”
The stimulus bill has also called for another round of PPP.
The legislation, while through the House and Senate, still needs the president’s signature.