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ACEC News / Advocacy

May 27, 2020

ACEC Letter to House Members Praises PPP Flexibility Act, Calls Out Additional Problem Areas

In a letter to all U.S. Representatives today, ACEC urged passage of the Paycheck Protection Program Flexibility Act of 2020 and highlighted two additional problem areas that may require congressional action.

On the pending legislation, ACEC praised the extension of the eight-week PPP loan forgiveness period to 24 weeks, saying it “would make it easier for engineering firms to use the funds and qualify for forgiveness.”

ACEC also supports the provisions allowing firms to use the original eight-week period if preferred and extending the repayment period from two to five years.

In the letter, the Council stressed its opposition “to the IRS ruling that business expenses covered by PPP loan forgiveness are not tax-deductible, as they would normally be. That restriction significantly reduces the value of loan forgiveness to eligible businesses, undercuts the intent of Congress with respect to the PPP program, and should be reversed.”

ACEC also expressed concern over efforts by federal agencies to invalidate loan forgiveness for qualifying firms by seeking a credit on contracts for the amount of the PPP loan, as suggested in guidance published by the Department of Defense.

“A contractor who performs primarily government contracts could see almost all of the loan forgiveness rescinded through the application of the credit to their direct costs or indirect cost rate, resulting in a lower reimbursement on government contracts performed in the current or future years,” ACEC stated. “If that same small business is unable to deduct the funded expenses from their taxable income, they will essentially be taxed on the loan forgiveness. The sum of the impact of the credit to direct and indirect costs and the tax on the loan forgiveness could easily exceed the amount of loan forgiveness, putting them in a worse position than if they had not taken the loan at all.”

Click here to read the letter.

All comments to blog posts will be moderated by ACEC staff.


May 27, 2020



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