This week on August 4th, USRPA joined with over 180 organizations in sending a letter to leadership of the House and Senate. The letter expressed support for including a technical correction addressing the tax treatment of loan forgiveness under the Paycheck Protection Program (PPP) in the next round of relief in response to the on-going COVID-19 pandemic.
When the PPP was adopted as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Congress made clear that any loan forgiveness under the program would be excluded from the borrower’s taxable income. Unfortunately, the IRS in publication of IRS Notice 2020-32 effectively overturned this policy by denying borrowers the ability to deduct the same expenses that qualified them for the loan forgiveness. The letter is attached below.
As Schumer, Pelosi, Mnuchin, and Meadows are scheduled to meet later today the outlook on reaching agreement on another round of relief in response to the on-going COVID-19 pandemic is mired in pessimism at the moment. The White House and House and Senate Democratic leadership are discussing a myriad of issues from state/local tribal relief, childcare, schools, UI, election assistance, broadband, to name just a few. McConnell, meanwhile, is monitoring the talks without attending. Many Senate Republicans are refusing to support any additional spending because $1 trillion still remains from the CARES Act.
There is a world of differences between the Senate proposal (HEALS Act) and the House passed bill (HEROES Act) without even taking into consideration Administration preferences. Normally one would expect an agreement on a top line number, in this instance between the $1 trillion provided in HEALS and the $3+ trillion in the HEROES Act. The spending priorities would then be adjusted as needed. To further complicate the situation, the Administration has announced that it will issue executive orders addressing the pandemic. One would expect that these will also impact the negotiations.
The Senate was scheduled to go out this week, but today McConnell said that the Senate will be in session next week. Of course, it is the darkest before the dawn and tomorrow may bring a breakthrough. In any event whether they extend or not, any agreement will take time to prepare and time for consideration which can all be provided if a deal is reached.