Farmers urge Congress to pass the Small Business Spending Protection Act
Farmers, ranchers, and other small business owners are calling on Congress to pass the Small Business Expense Protection Act (p. 3612, HR 6821), which would allow small businesses to withdraw expenses paid for with an enacted Paycheck Protection Program loan deduct their taxes.
Without this relief, millions of small businesses will face significant tax liabilities at a time when they can least afford additional financial burdens, the American Farm Bureau Federation and more than 115 other organizations warned House and Senate leaders.
Created by Congress under the Coronavirus Aid, Relief and Economic Security (CARES) Act, the PPP was designed to help small businesses weather major liquidity bottlenecks, retain employees, and weather an unprecedented economic disruption from the COVID-19 pandemic.
However, the program is undermined by an IRS rule that says that normally deductible business expenses are not deductible if the company pays the expenses with a PPP loan that is subsequently waived. As the Groups pointed out in the letter, the tax regime contradicts the legislature’s intention not to tax the waived PPP loan amount as income.
“The Small Business Expense Protection Act will resolve this misinterpretation and restore the ability of small businesses that have received PPP loans, as the CARES Act intended, to deduct business expenses,” the groups said in a letter to House Speaker Nancy Pelosi , D-Calif. , Minority Leader in the House of Representatives Kevin McCarthy, R-Calif., Senate Majority Leader Mitch McConnell, R-Ky., And Senate Minority Leader Chuck Schumer, DN.Y.
The Small Business Expense Protection Act has been referred to the House Ways and Means Committee and the Senate Finance Committee.