Level 15

PPP: No deduction for forgivable expenses? Not so fast.

Forum|Forum|5 years ago
November 20, 2020
2 replies
8 views

Just yesterday, the Treasury and the IRS issued Rev. Rul. 2020-27 and Rev Proc. 2020-51 to (1) reiterate its position on the disallowance of expenses that are otherwise deductible but which the taxpayer reasonably expects to be forgiven under PPP and (2) provide safe harbors and procedures for unforgiven expenses to be deducted.

Today, Senate Finance Committee leadership issued a statement to criticize the Treasury for issuing guidance that is contrary to Congress' intent and request that the position be reconsidered (https://thehill.com/policy/finance/526786-grassley-wyden-criticize-treasury-guidance-concerning-ppp-loans#)

With the Treasury relying on what is in the CARES Act, let's hope the bipartisan Small Business Expense Perfection Act (https://www.congress.gov/bill/116th-congress/senate-bill/3612/text) will get some traction to add the much needed texts to realign the letter with the spirit of the law.

This topic has been closed for replies.

abctax55

Level 15

Sure would be nice to get this clarified sooner than later - it's making year-end tax planning a wee bit difficult...

HumanKind... Be Both

BobKamman

Level 15

Revenue rulings don’t come from Treasury, and don’t bind taxpayers or the courts. They merely state the position of the Internal Revenue Service as to how the law should apply to a particular set of stated facts.

That’s the message from the Finance Committee, whose chairman Senator Geezerley is sick at home with Covid-19. Nothing is going to get enacted soon. Maybe we will have some law by the July 15 filing date next year.

itonewbieAuthor

Level 15

@BobKamman wrote:
Revenue rulings don’t come from Treasury, and don’t bind taxpayers or the courts. They merely state the position of the Internal Revenue Service as to how the law should apply to a particular set of stated facts.
That’s the message from the Finance Committee, whose chairman Senator Geezerley is sick at home with Covid-19. Nothing is going to get enacted soon. Maybe we will have some law by the July 15 filing date next year.

Technically, it's the IRS that issues revenue rulings but we all know why it's always formally communicated that these are issued by the Treasury and the IRS.

Yeah, these are not binding to taxpayers and the courts (especially with your view that courts no longer give much deference to revenue rulings) but I wonder how many plan to take a contrary position, include a 8275 (or -R) for disclosure, and perhaps be prepared to fight that out in court.

---------------------------------------------------------------------------------Still an AllStar

BobKamman

Level 15

Treasury issues and announces Regulations. Announcing Revenue Rulings is an aberration that has only widely appeared in the last four years, with acting or puppet IRS Commissioners just following orders.

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