Arlington, VA (May 6, 2020) - The Air Conditioning Contractors of America (ACCA) announces that Barton James, ACCA president and CEO sent a letter to Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) of the House Ways and Means Committee, as well as Senators John Thune (R-SD) and Mark Warner (D-VA), Chair and Ranking Member (respectively) of the Senate Subcommittee on taxation and an IRS oversight about a recent IRS ruling regarding the Payroll Protection Program (PPP).
The recent ruling by the IRS would require participants to pay taxes on any expenses that are paid for by PPP funds, resulting in loan forgiveness that would otherwise be deductible. This ruling effectively makes PPP funds taxable income and mitigates much of the economic relief that the CARES Act was designed to deliver.
The ruling states, “no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).” This is contrary to the purpose of the CARES Act, which specifically states, “any amounts forgiven by a PPP loan “shall be excluded from gross income.” This ruling has already resulted in bipartisan criticism from lawmakers who wrote the bills, who claim it was not their intention to relieve employers of payroll costs and other business-related expenses, while at the same time making them pay more in taxes.
“This ruling causes an unnecessary financial strain on HVACR contractors who have used the Payroll Protection Program as a vital lifeline during this economic and public health crisis,” says Barton James, ACCA president and CEO. “We hope that Congress and the IRS act quickly to reverse this ruling and limit the damage it causes to small businesses and contractors across the country.”
To help preserve PPP relief, ACCA has issued an action alert, asking contractors to send letters to their state representatives.
To read ACCA’s letter to Congress, click here.
For additional information, please contact Deb Weiner, Manager of Communications and Strategic Partnerships at email@example.com or by phone at 703-824-8862.