Georgia senator Kelly Loeffler joins colleagues in urging small business loan forgiveness

WASHINGTON – U.S. Senator Kelly Loeffler, R-Ga., joined U.S. Senators Mike Braun,R-Ind., John Hoeven, R-N.D., and Lisa Murkowski, R-Alaska, in introducing the Safeguarding Small Business Act to remove all tax liability associated with loan forgiveness under the Paycheck Protection Program.

Last week, the IRS issued guidance (Notice 2020-32) that any expenses covered by forgivable portions of a PPP loan will not be considered a business deduction, effectively levying an unforeseen tax on small businesses, completely contrary to the original intent of the Coronavirus Aid, Recovery and Economic Stability (CARES) Act.

“Small businesses are the lifeblood of our economy and have been hard hit by this pandemic,” Loeffler said in a news release. “Without our legislative fix, the government is effectively taxing the very businesses we have been advocating for in their critical time of need. Small businesses and their employees need Congress to provide relief and stability during these uncertain times, not taxes and red tape.”

“We need to do all we can to help our nation’s small businesses weather this public health emergency,” Hoeven said. “Our legislation would ensure that the IRS is able to administer the Paycheck Protection Program as Congress intended by making small businesses expenses covered by the PPP deductible. This will ensure that our small businesses are able to keep more of their cash to help them recover from this pandemic.”

“As a part of the CARES Act, the Paycheck Protection Program, or PPP, was put in place to help keep small businesses that have been impacted by COVID-19 afloat,” Murkowski added. “Our local, mom-and-pop shops make up a huge percentage of Alaska’s businesses, and ultimately, our economy. We must do all we can to give our small businesses whatever help we can to make sure they are able to eep their workers employed and their doors open.”

The Safeguarding Small Business Act is a technical correction that makes clear that section 1106(i) of the CARES Act allows deductions otherwise allowable under the Code for payments of eligible section 1106 expenses by a recipient of a covered loan if the covered loan is subsequently forgiven under section 1106(b) of the CARES Act as a result of the payment of those expenses.