MADISON – Wisconsin Manufacturers & Commerce (WMC) – the combined state chamber, manufacturers’ association and safety council – sent a letter earlier this week to the Wisconsin congressional delegation requesting further action on the taxes many businesses may face that received forgivable PPP loans.
Earlier this year, congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which helped alleviate the economic struggles many businesses faced in response to the pandemic. Included in the CARES Act was PPP, which included a promise to small business owners, that if they used the loans for appropriate payroll and non-payroll expenses, the loans would be forgiven.
“The CARES Act explicitly stated that the portion of the PPP loan that qualified for loan forgiveness ‘shall be excluded from gross income’ for tax purposes,” the letter reads.
Despite this, the Internal Revenue Service (IRS) issued Notice 2020-32 and Revenue Ruling 2020-27, which leaves loopholes that allow the IRS to collect taxes on forgivable PPP loans, leaving thousands of Wisconsin businesses with a potentially unsurmountable tax increase on forgivable loans.
In the letter, WMC requests that the Wisconsin congressional delegation recognize the need for a provision to overturn IRS Notice 2020-32 and Ruling 2020-27 and works to insert it in any COVID-19 legislative package, or independent legislation be passed prior to the end of the year.
Click here to read the full letter.