After months of negotiations, starts, stops, and restarts, the U.S. Congress this week sent a $908 billion coronavirus stimulus package to President Trump for his signature before heading home for the holiday recess. One of the key provisions of the bill represents a major win for the business community—which ASA had lobbied for over the past several months. In the section of the bill dealing with the Paycheck Protection Program, language was included that clearly states that business expenses paid for with the proceeds of PPP loans are tax deductible.

When the PPP was adopted as part of the Coronavirus Aid, Relief, and Economic Security Act, Congress made clear that any loan forgiveness under the program would be excluded from the borrower’s taxable income. However, in a notice published in April, the U.S. Internal Revenue Service undercut this policy by denying borrowers the ability to deduct the same expenses that qualified them for forgiveness. Business groups, including ASA, have been lobbying Congress to allow the tax deductibility of payroll and other expenses paid or incurred to achieve loan forgiveness. Recently, ASA sent a letter to House and Senate leaders urging them to support the deductibility language.

The stimulus package also includes additional funding for the PPP and allows small businesses hit hardest by the pandemic to receive a second forgivable loan. It extends all pandemic unemployment insurance programs and reinstates federal supplemental unemployment insurance benefits through March 14, 2021. The bill, which was included as part of the end-of-the-year spending agreement, is expected to be signed by the president.