Writing off Expenses Paid for with PPP Money & a New DoL Decision

By Littler Mendelson

The Consolidated Appropriations Act of 2021 contains an important aspect of that legislation that many of you have been clamoring for: companies now may write off expenses paid for with PPP money.  This change was buried in section 276(a) of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (which is part of the stimulus bill). As you likely know, the Internal Revenue Service (IRS) refused to adopt this position absent express language to this effect in the statute. There was bipartisan support for this new language, but it never seemed to make it into any of the draft stimulus bills. Further cementing this victory, the IRS has announced that an official change in its position on this issue.  We know this is a welcome, albeit belated, result.

Also in the news and relevant to this industry is the DOL’s recent action taken to finalize the independent contractor rule.  This rule impacts traditional registries and the online virtual marketplace platforms that facilitate caregiving services as it provides a new paradigm for analyzing whether a caregiver is truly an independent contractor or employee (focusing on two key factors – control and opportunity for profit or loss – instead of weighing seven factors).  The rule is supposed to go into effect March 8, 2021, but President Joseph Biden has announced his intent to issue a memorandum on his first day in office freezing the effective date of any legislation that is not yet in effect. He also has expressed an interest in derailing the rule entirely. If the rule were to become effective, the biggest question would be its impact on the Field Assistance Bulletin No. 2018-4, which provided guidance on when registries are employers under federal wage and hour law. This is because the new rule would replace any inconsistent previous interpretation of independent contractor status.  So stay tuned for more developments on this front!

SBA and Treasury Announce PPP Re-Opening; Issue New Guidance

Public Health Emergency Extended The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced on Friday, January 8, 2021, that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able…

New IRS Guidance Eliminates all Tax Benefits of PPP Loan Forgiveness

A special report from Ted Cuppett of The Health Group The IRS has released guidance (Notice 2020-32) to explain that a taxpayer that receives a loan through the Paycheck Protection Program (PPP) is not permitted to deduct expenses that are normally deductible under the Code, to the extent the expenses were reimbursed by a PPP…