SPRINGFIELD, Mo. — Small businesses that took a paycheck protection loan (PPP) may now face a sizable tax bill.
Rick Snelson qualified for a PPP Loan for his business, Car-fi, where he employes 20 people.
“It was a scary time,” said Snelson. “When the opportunity arose to get the loan, I jumped on it.”
Small business owners normally deduct such expenses as payroll, rent and utilities. However, business owners who took that government aid to keep their business afloat and their employees paid may not be able to take those deductions.
“At the time the PPP loans were offered, we really didn’t have any details and we also didn’t have any idea how long we were going to be closed down,” said Greg Murdaugh, owner of Piano Craft. “Or how long it would take for the business to come back at all so, we were really in the dark.”
Carrie Brown, a CPA for Elliot Robinson and Company, said the bill was written, passed and distributed to small businesses quickly.
“Congresses intent at the time of writing and passing the act was for these funds to not create a taxable event for these taxpayers,” said Brown. “The IRS did come in fairly quickly for the passage of the act. They basically notified taxpayers that there was a specific area of the tax code that was going to be applied.”
Brown said since May, the House and Senate have introduced several bills to protect the business owners from a taxable event.
“We have spent the better part of the summer and fall waiting for clarification and for potential legislation that would change this,” said Brown. “In mid-November, we did receive that clarification and the IRS is holding firm.”
For Brown, there is still a glimpse of hope a bill could pass for tax forgiveness.