Mold Builders Call on Congress to Allow Deduction of Paycheck Protection Program Expenses

The goal of the PPP was to provide stability for America’s employers. However the IRS continues to disallow deduction of approved expenses if the Small Business Administration forgives their loan.


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Stock image of tax work.

On Dec. 3, the American Mold Builders Association (AMBA, Indianapolis, Indiana) joined more than 500 national and state organizations calling on Congress to pass legislation clarifying that recipients of Paycheck Protection Program (PPP) loans may deduct approved expenses if the Small Business Administration forgives their loan. Despite congressional intent and repeated statements from leading lawmakers, the IRS continues to disallow the deduction, a surprise tax increase of up to 37% on some PPP borrowers.

“Congress needs to take action now, remove the uncertainty manufacturers face and pass legislation directing the IRS to comply with the CARES Act,” says AMBA Managing Director Kym Conis. “Approximately 75% of AMBA members received a PPP loan. Unfortunately, a year-end tax surprise that overrides congressional intent will worsen the financial situation of countless manufacturers.”

According to Conis, the goal of the PPP was to provide stability for America’s employers, which used the loan funds to prevent millions of layoffs. “Because most of our manufacturers are designated to be essential critical infrastructure (with many being part of the medical supply chain and coronavirus response efforts), our members need to use their resources and available funds for payroll and continuing operations—not sending them to Washington because of a misguided IRS ruling.”

In April, the IRS issued Notice 2020-32, disallowing those who have their PPP loans forgiven from deducting approved expenses as intended by Congress. In November, the IRS went even further, stating that borrowers who expected to have their loans forgiven in the future may not deduct the expenses in 2020.

Reversal of the IRS position has the support of the top two Senate tax writers, a large bipartisan number in both chambers of Congress and an overwhelming number of trade groups in Washington and across the country. The letter calling on Congress can be found here.