The Maryland Association of CPAs has joined Maryland Gov. Larry Hogan in urging Congress to pass another round of economic relief for businesses that have been negatively impacted by COVID-19.
In an Oct. 30 letter, MACPA President and CEO Tom Hood urged Senate Majority Leader Mitch McConnell, Senate Minority Leader Charles Schumer, House Speaker Nancy Pelosi, and House Minority Leader Kevin McCarthy to encourage both houses of Congress to pass Senate Bill 3612, the “Small Business Expense Protection Act of 2020,” before the end of the year.
“Maryland CPAs have been on the front lines of the COVID-19 financial crisis since the beginning, and they have told us that America’s Main Street businesses need more aid to survive the pandemic,” Hood wrote. “We appreciate your bold leadership during these trying times, and we urge you to continue your efforts to pass much-needed relief in the next CARES Act.”
- Relief for 501c(6) organizations in the next iteration of the Paycheck Protection Program and other relief packages (included in both the HEALS Act and the HEROES Act);
- Limited liability relief from pandemic claims for employers and businesses (included in the HEALS Act);
- Support for state government relief (included in the HEROES Act);
- Support for Senate Bill 4117, which would promote auto-forgiveness for PPP loans of less than $150,000 (included in both bills);
- Tax deductibility of expenses that qualify for relief under the CARES Act (included in both bills); and
- Support for S. 3995, the Remote and Mobile Worker Relief Act (HEALS Act).
With tax filing season just around the corner, Hood said the fifth of those proposals is particularly critical and must be addressed before the end of the year.
Section 1106(i) of the original CARES Act clearly indicates that any PPP loan forgiveness would be excluded from a borrower’s taxable income. However, in Notice 2020-32, the IRS ruled that business expenses related to PPP loans cannot be deducted, effectively nullifying the forgiveness of such loans.
“Most taxpayers are completely unaware of this change and will face an unexpected surprise when they prepare their 2020 taxes early next year,” Hood wrote. “This will create a tax burden and possible penalties and interest at a time when taxpayers will be the least prepared.”
Congress could reverse that IRS decision by passing the Small Business Expense Protection Act of 2020, Hood noted.
“Now that the Small Business Administration is beginning to process loan forgiveness applications and businesses are preparing to file their 2020 taxes, it is critical that Congress provides clarity and certainty about the tax treatment of these PPP expenses and loans,” he wrote.