PPP Loan Usage and Deductions - Understanding IRS Notice 2020-32 and the current uncertainty surrounding the ability to deduct expenses paid from PPP loan funds

Kati Sanford Goodner

As this is a fast moving topic, please note that this article is current as of 5/7/20. For contact information, please click here.

On April 30, 2020, the IRS issued Notice 2020-32 to specifically address the deductibility, or, rather, lack thereof, for business expenses that are paid using proceeds a business receives from a Paycheck Protection Program (“PPP”) loan. While most accountants will tell you that the logic behind the Notice makes sense from an accounting perspective, Notice 2020-32 caught many business owners by surprise, and congressional leaders are now promising to make legislative changes to “correct” what they see as a position that is contrary to legislative intent if the IRS does not reverse course. Lewis Thomason’s Tax Team continues to monitor the Small Business Expense Protection Act that was introduced yesterday in the Senate (S. 3612) which, if passed, would override Notice 2020-32. For additional information, click here.