Here is another thing lawmakers are deciding this week: tax implications for PPP loans. These are the payroll loans that were offered this spring for businesses to maintain people on their payroll. At issue is whether or not these businesses should be able to deduct expenses such as wages on tax returns.
Loans that are forgiven for payroll purposes are not taxable, as it stands now. The Treasury Department says that allowing payroll deductions on free money would be double-dipping but Congress could overrule this position. Essentially you are using the government’s money to pay your payroll and then deducting that payroll as an expense.
It makes sense that the Treasury Department would not like this when its aim is to increase revenue for the country. Still, small businesses will struggle, PPP loan or not, and these are unusual times wherein every incentive to do business safely should be offered. Or so one would think.