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Coronavirus stimulus bill provides PPP deductibility, simplified forgiveness application

Written on Dec 23, 2020

OSCPA staff report

Congress on Dec. 21 passed a $900 billion COVID-19 relief bill that ensures tax deductibility for business expenses paid with forgiven Paycheck Protection Program loans, provides fresh PPP funding, makes Sec. 501(c)(6) not-for-profit organizations eligible for loans for the first time, and offers businesses facing severe revenue reductions the opportunity to apply for a second loan.

The legislation, the Consolidated Appropriations Act, 2021, also provides $600 stimulus payments to individuals, adds $300 to extended weekly unemployment benefits and provides more than $300 billion in aid for small businesses. A summary of the stimulus bill is available here.

President Trump on Tuesday night implied he might veto the bill and urged Congress to make several changes, including increasing the dollar amount of the direct payments for Americans. Congress could override a veto with a two-thirds majority vote in each chamber. The measure sailed through the House, 359-53, and the Senate, 92-6.

PPP deductibility was an issue championed by the accounting profession, including OSCPA and the AICPA. The IRS had recently issued guidance that disallowed the deductibility of forgiven PPP loan expenses, creating an unnecessary burden that has been negated by Monday’s legislation. The new deductibility provision applies to loans under both the original PPP and subsequent PPP2 loans.

“Many of our members have been on a full-court press since April 30 for deductibility and to overturn IRS Notice 2020-32,” said OSCPA Tax Policy Director Greg Saul, Esq., CAE. “There is no doubt that had a huge impact on deliberations for this bill. Thank you to everyone who wrote their federal elected officials through our Take Action page – those grassroots efforts really made a difference.”

Another top OSCPA priority was enacted and creates a simplified one-page certification when applying for PPP forgiveness for loans of $150,000 or less. In October, Treasury and the SBA had issued an interim final rule (IFR) allowing businesses to apply for forgiveness using a simplified application (Form 3508S), but this only applied for PPP loans of $50,000 or less.

Deliver access to much-needed business relief programs

Accountants played a significant role in helping millions of small businesses acquire $525 billion in forgivable loans during the five months the PPP program was originally accepting applications, according to SBA reporting. CPAs can position themselves now for PPP2 to help their organization or clients through a new fintech funding solution from CPA.com, the technology subsidiary of AICPA.

The CPA Business Funding Portal, made possible through a partnership between CPA.com and Biz2Credit, gives CPAs access to best-in-class business financing options. Available through a subscription model, the portal is available to organizations of all sizes to help CPAs:

  • Access government-backed loan programs, such as PPP2
  • Gain critical insights and AICPA PCPS guidance
  • Manage client financing applications across your firm or organization

Enhance your visibility as the trusted business adviser for your organization or clients through this valuable fintech solution. Watch the video above and visit this web page to earn more.

Get the latest on PPP2 on Jan. 14

Join us for our Jan. 14 Town Hall when we'll talk with Erik Ageirsson, president & CEO of CPA.com, and Lisa Simpson, V.P. of Firm Services for AICPA, about PPP2 and the CPA Business Funding Portal. Register now.