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December 3, 2020

ACEC Action Alert: Call for Essential Changes to the Paycheck Protection Program

Urge your Congressional delegation to make important changes to PPP loans in legislation before the end of 2020.
 
The CARES Act included language explicitly stating that any portion of a PPP loan that qualified for loan forgiveness “shall be excluded from gross income” for tax purposes.  Unfortunately, the IRS contradicted congressional intent in Notice 2020-32 by ruling that expenses covered by PPP loan forgiveness are not tax-deductible.  Notably, the IRS ruling was released several weeks after most PPP borrowers submitted their applications and signed their loan agreements.   
 
Legislation is pending in the House and Senate to overturn the IRS decision and ensure the deductibility of covered expenses. ACEC is actively participating in a broad coalition of groups to support the change.
 
In addition, a provision of the Federal Acquisition Regulation (FAR) for government contractors could further negate any benefit from the PPP loan.  The FAR credits clause (FAR 31.201-5) could require a firm contracting with the government to calculate a credit to their indirect costs for the allocable portion of the forgiven PPP loan.  The firm would be billing at a much lower rate the following year – and potentially in subsequent years, in the case of multi-year contracts.
 
ACEC is seeking clarification that the FAR credits clause does not apply to forgiven PPP loans.
 
Log in here to open a sample email, which you can personalize with firm-specific information and details about how the tax treatment and potential credit for forgiven PPP loans will impact your business.  You can also send the sample letter without changes. Click on the lawmaker’s name to edit the message. 


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