Late in the evening of December 20th, Congress passed the Consolidated Appropriations Act. It is anticipated that President Trump will sign this act into law shortly. The Act provides a Christmas gift for anyone who received funds under the Paycheck Protection Program. The IRS issued a promulgation months ago saying that taxpayers who received funds under the PPP program could not also deduct the expenses that were used to qualify for that program. Thanks to the Consolidated Appropriations Act, Congress clarified their intent and now allows what is known as a “double dip“ and will now allow you to deduct those expenses against income, thus providing an additional tax benefit.
When the IRS issued their pronouncement, I was very concerned about some of my clients that were struggling due to the pandemic, particularly my restaurant clients. Not allowing the double dip would in effect have caused taxpayers receiving funds under the PPP program to pay taxes on those funds at a time when cash flow was critical. Congress did the right thing in allowing the double dip so that struggling businesses don’t have a tax surprise in a few months.
I wish you all health and happiness in the new year and happy holidays!