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IRS Provides Safe Harbor for 2020 Expenses Paid with PPP Loans

By Net Assets posted 12 days ago

  

(From SHRM) On April 23, the IRS announced the safe harbor for small businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct certain expenses because they relied on guidance issued before the enactment of the Consolidated Appropriations Act, 2021, in December 2020. The safe harbor provides relief to PPP loan recipients who filed their 2020 tax returns and did not deduct business expenses paid with funds from PPP loans. However, the guidance applies only to returns that were originally filed on or before Dec. 27, 2020 and does not apply to second-draw PPP loans. Going forward, the IRS will not provide retroactive relief for expenses paid with PPP loans that aren't deducted on the appropriate tax year's tax return.

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