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RBC | Did you get a PPP loan for your business? The Treasury Dept. has a plan to get some of that money back, and it will cost businesses.
As if things weren’t hard enough for Colorado’s small businesses, news comes that the Trump administration plans to claw back a chunk of the Paycheck Protection Program (PPP) funds legitimate businesses have used as a lifeline to keep their employees on the payroll.
When Congress passed PPP, the legislation made it clear that these loans would ultimately be forgiven if businesses used them for approved purposes, mostly payroll. And, the law ensured — in writing — that any forgiven amounts would not be taxable, meaning that businesses could use all those funds to keep folks employed.
More than 80 Rio Blanco County businesses, including this one, signed up in good faith, secure in the knowledge that if they used those funds as Congress intended, they would be forgiven and not taxed.
PPP loans under $150,000 distributed in Rio Blanco County total $849,603.58 for Rangely businesses, representing more than 120 jobs. Meeker businesses received loans under $150,000 totaling $1,627,491.54 that represent more than 260 jobs. Both hospitals received loans between $1-2 million (392 jobs). Only one other business in Meeker received a loan for between $350,000 and $1 million, claiming 27 jobs. Two additional Rangely businesses received loans between $350,000 and $1 million (54 jobs), and three more Rangely businesses received PPP funds between $150,000 and $350,000 (81 jobs).
President Trump’s Treasury Secretary, Steve Mnuchin, has other ideas. According to the Treasury Department, forgiven funds may not be taxable, but the payroll businesses paid with those funds can no longer be considered a business expense. Now, we don’t know Mr. Mnuchin personally, but our guess is that, as Treasury Secretary, he probably knows something about math: disallowing businesses from claiming that payroll as an expense is the same thing as taxing the forgiven loan.
Which means that Colorado’s small businesses are going to get hit with a huge surprise tax bill, but most won’t know it until — wait for it — after the November election! Surprise!
Some members of the U.S. Senate weren’t amused by this little “Lucy with the football” tomfoolery. Sens. Chuck Grassley (R-Iowa) and John Cornyn (R-Texas) have led a fight in the Senate to tell the Treasury Department that they meant what they said: the forgiven loans should not be taxable, including through the back door. Other senators are worried about the “optics” of standing up for small businesses, if you can imagine.
Sen. Cory Gardner (R-Colo) has signed on as a cosponsor of Senate Bill 3612 (https://www.congress.gov/bill/116th-congress/senate-bill/3612). Sen. Michael Bennet (D-Colo) has not weighed in publicly, but it’s not too late. The U.S. Treasury cannot be allowed to override Congress’ promise to our small business community.
Localized from a National Newspaper Association op-ed