Tag: CARES Act

Small businesses that took PPP aid may face a tax problem

A recent IRS ruling tying up a loose end in the 2020 economic-relief law could force many small businesses to pay taxes on government aid meant to help through the pandemic.

The agency on Nov. 18 said the businesses cannot deduct expenses such as payroll and rent, paid for with money from the Paycheck Protection Program of the CARES Act. Such deductions are common when those expenses are paid for with revenue from running a business.

The ruling hardened a divide between the Trump administration and the main tax writers in Congress, who have sought since the corona­virus outbreak produced an economic slowdown to ensure that aid to businesses not be taxed. Continue reading.

Tax change in coronavirus package overwhelmingly benefits millionaires, congressional body finds

Washington Post logoThe provision, included by Senate Republicans, would cost taxpayers approximately $90 billion in 2020

More than 80 percent of the benefits of a tax change tucked into the coronavirus relief package Congress passed last month will go to those who earn more than $1 million annually, according to a report by a nonpartisan congressional body expected to be released Tuesday.

The provision, inserted into the legislation by Senate Republicans, temporarily suspends a limitation on how much owners of businesses formed as “pass-through” entities can deduct against their nonbusiness income, such as capital gains, to reduce their tax liability. The limitation was created as part of the 2017 Republican tax law to offset other tax cuts to firms in that legislation.

Suspending the limitation will cost taxpayers about $90 billion in 2020 alone, part of a set of tax changes that will add close to $170 billion to the national deficit over the next 10 years, according to the Joint Committee on Taxation (JCT), the nonpartisan congressional body. Continue reading.

Rep. Phillips pushes for CARES Act fix and New Business Preservation Act to shield startups

Phillips led a bipartisan letter calling for changes to help startups in the short-term, and is leading legislation for long-term relief

WASHINGTON, DC— Congressman Dean Phillips is working to strengthen and protect the country’s start-up businesses with a pair of legislative fixes designed to provide relief for new businesses across the country.

Today, Phillips released a bipartisan letter signed by ​54 of his colleagues calling on the Small Businesses Administration to update the definition of “small business” to include many of the country’s start-ups so that these companies can access relief included in $2.2 trillion CARES Act signed by President Trump last week. The SBA’s policy as written would exclude many of the nation’s startups from accessing the $350 billion small business loan program, which will lead to dire consequences for businesses across the country that are struggling along with the rest of the economy.

“We are being forced to significantly reduce our spending and extend cash runway to preserve the future of the company,” said Mike Kujak, President and CEO of Francis Medical, based in Maple Grove, Minn. “This language as written needs to be resolved immediately or companies like ours will be forced to furlough employees or take other drastic measures just to stay afloat.” Continue reading “Rep. Phillips pushes for CARES Act fix and New Business Preservation Act to shield startups”