HR NEWS ALERT
On April 30th, the IRS released Notice 2020-32 (https://www.irs.gov/pub/irs-drop/n-20-32.pdf), businesses who receive a loan through the federal PPP will not be allowed to deduct the wages paid using loan proceeds. The Internal Revenue Service (IRS) stated that allowing the loans to be tax-deductible would create a "double tax benefit" for recipients.
Wages are typically a deductible expense. But the PPP loans are forgivable, as long as they are used for allowable costs like payroll and utilities. While forgiven debt usually counts as taxable income, PPP loans will not be treated as tax-exempt. The IRS invoked Section 256 of the tax code, which states that deductions can't be taken if they are tied to a certain class of tax-exempt income.
To Learn More About This we encourage our clients to speak to their CPAs or see below an upcoming Webinar provided by one of our CPA Partner Firms – Gray Gray & Gray
Please do not hesitate to contact our team at payroll@on-timepayroll.com or 781-209-1188.
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