Letter to the Hon. Nancy Pelosi, Speaker of the House of Representatives, and the Hon. Kevin McCarthy, House Minority Leader - Newhouse, Phillips Lead Bipartisan Letter to Protect Small Business Expenses in COVID-19 Package
Speaker Pelosi and Leader McCarthy,
Congress has taken unprecedented bipartisan action to assist American families and businesses during the COVID-19 pandemic. A hallmark of this response is the Paycheck Protection Program (PPP), which has assisted small businesses in providing paychecks for their employees and kept their lights on during the pandemic.
In June, Congress took further bipartisan action by passing H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020, to provide small business owners additional discretion on how they spend their forgivable loans under the PPP. A key aspect of this legislation was relaxing the amount of the loan required to be spent on payroll from 75% to 60% -- allowing businesses to use up to 40% of their PPP funds on forgiven expenses such as rent, utilities, and interest on certain debt.
However, contrary to Congressional intent, the IRS issued guidance prohibiting companies from taking tax deductions for these expenses. To reverse this flawed rulemaking, Congress must ensure small businesses can maximize their PPP dollars. We can do so by passing legislation like H.R. 6884, the FIRST Act, which will allow businesses to deduct forgiven expenses paid with PPP funds.
As the House continues to discuss another round of legislation to support our constituents during the COVID-19 pandemic, we must address this important matter and reassert Congressional intent of the PPP. We respectively request the inclusion of legislation like the FIRST Act in any further COVID-19 relief package.