Paycheck Protection Program (PPP) Deductibility Coaltion Letter

Thursday, December 3, 2020 - 11:45am

December 3, 2020

The Honorable Nancy Pelosi                                                  The Honorable Mitch McConnell

Speaker, House of Representatives                                        Majority Leader

United States Capitol                                                              United States Senate

Washington, DC 20515                                                          Washington, DC 20510

The Honorable Kevin McCarthy                                            The Honorable Charles Schumer

Minority Leader, House of Representatives                           Democratic Leader

United State Capitol                                                               United States Senate

Washington, DC 20515                                                          Washington, DC 20510 Dear Speaker Pelosi and Leaders McConnell, McCarthy, and Schumer:

We, the undersigned organizations, representing millions of businesses who employ tens of millions of American workers, urge Congress to enact legislation before the end of the year that includes a technical correction addressing the tax treatment of loan forgiveness under the Paycheck Protection Program (PPP). At the onset of the COVID-19 pandemic, Congress responded with speed, cooperation, and an eye to preventing the worst potential economic outcomes. We ask that you bring that same spirit of urgency and cooperation before the end of this session to prevent an avoidable catastrophe for millions of small businesses that, without Congressional action, will face a surprising, and, in many cases, insurmountable tax bill next year.

One of the most effective economic relief measures for our members was the PPP, passed as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The terms of the PPP are simple: if qualifying small businesses use a federally-guaranteed loan to pay their employees and cover certain non-payroll expenses, the loan will be forgiven. From April 3, when the program launched, through August 8, when its authorization expired, the Small Business Administration (SBA) guaranteed $525 billion in PPP loans to 5.2 million qualifying small businesses nationwide, preserving tens of millions of paychecks for their employees as the pandemic spread throughout the country.

Included in the CARES Act was a provision stating that any portion of a PPP loan that qualified for loan forgiveness “shall be excluded from gross income” for tax purposes. This tax-free treatment of any forgiven loan amount was a key provision in the law and featured prominently in the debate leading up to and following the legislation’s enactment.

Despite Congress’s clear intent, the Internal Revenue Service (IRS) issued Notice 2020-32, which specified that “no deduction is allowed under the Internal Revenue Code…if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the [CARES Act].” The effect of this ruling is to transform tax-free loan forgiveness into taxable income, raising the specter of a surprise tax increase of up to 37 percent on small businesses when they file their taxes for 2020.


Additionally, the IRS recently issued Revenue Ruling 2020-27, stating that expenses funded through a PPP loan are not deductible for 2020 if “the taxpayer reasonably expects to receive forgiveness of the covered loan on the basis of the expenses it paid or accrued during the covered period, even if the taxpayer has not submitted an application for forgiveness of the covered loan by the end of such taxable year” [emphasis added].

Since the IRS issued Notice 2020-32, Congress has signaled that it intends to reverse the ruling. The Democratic and Republican Chairs of the House Ways and Means and Senate Finance Committees issued public statements saying that the IRS Notice, and, more recently, the IRS Revenue Ruling, is flawed and contrary to Congressional intent. In addition, a provision to overturn Notice 2020-32 was included in the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act that passed the House of Representatives in May.

The most recent IRS Revenue Ruling creates a renewed sense of urgency for Congress to address this pivotal issue before the end of the year. Allowing the IRS position to remain unchallenged will result in a significant tax increase on small business owners already suffering from the effects of COVID-19 shutdowns.  This tax will hit small business owners after their PPP loan has already been spent, and just as many states are re-imposing mandatory closures of thousands of businesses in the face of spiking numbers of COVID-19 cases.

Many PPP loan recipients retained employees on their payrolls, even when there was little to no work to perform, in compliance with the intent of the program to keep people employed and off the unemployment rolls. The IRS changed the rules after businesses took out PPP loans, and business owners are now being asked to pay what amounts to a surtax on their workforce.

Without Congressional action, businesses will face an unexpected tax bill when they file their taxes for 2020, as they continue to struggle with government mandated shutdowns or slowdowns. Many of those businesses will close and never re-open. This senseless tax policy stands both the letter and spirit of the PPP on its head.

For all these reasons, the undersigned business organizations urge you to act before the end of 2020 on this important matter.



National Trade Associations

Associated General Contractors of America

Air Conditioning Contractors of America (ACCA) AMAC Action

Ambulatory Surgery Center Association AMCOT

America's SBDC

American Academy of Dermatology Association American Academy of Family Physicians American Academy of Pediatric Dentistry


American Academy of Podiatric Practice Management American Apparel & Footwear Association (AAFA) American Association Of Advertising Agencies American Association of Neurological Surgeons American Bakers Association

American College of Gastroenterology

American College of Osteopathic Family Physicians American Cotton Producers

American Cotton Shippers Association American Council of Engineering Companies American Council of Independent Laboratories American Dental Association

American Down and Feather Council American Farm Bureau Federation American Feed Industry Association American Horse Council

American Institute of Architects (AIA) American Institute of CPAs

American International Automobile Dealers Association American Lighting Association

American Mold Builders Association American National CattleWomen, Inc. American Olive Oil Producers Association American Optometric Association American Podiatric Medical Association

American Road & Transportation Builders Association American Seed Trade Association

American Sheep Industry

American Society for Radiation Oncology American Society for Surgery of the Hand American Society of Plastic Surgeons American Society of Travel Advisors American Soybean Association

American Subcontractors Association American Supply Association

American Veterinary Medical Association AmericanHort

Asian American Hotel Owners Association Associated Builders and Contractors Associated Equipment Distributors Association of Equipment Manufacturers

Association of Fund-Raising Distributors and Suppliers Association of Marina Industries


Association of the Wall and Ceiling Industry Atlantic Intracoastal Waterway Association Auto Care Association

Brewers Association

Building Service Contractors Association International Business Solutions Association

CCIM Institute

Cellulose Insulation Manufacturers Association Certified American Grown

Chemical Fabrics and Film Association Coalition of Franchisee Associations Congress of Neurological Surgeons Convenience Distribution Association Cotton Growers Warehouse Association Cottonseed and Feed Association

Council of Fashion Designers of America (CFDA) Customized Logistics and Delivery Association Distilled Spirits Council of the United States

EPS Industry Alliance Family Business Coalition Farm Credit Council

FCA International FEUSA

Financial Executives International

Fire Suppression Systems Association (FSSA) FPDA - Motion & Control Network


Glass Packaging Institute (GPI) Global Business Travel Association Global Cold Chain Alliance Greeting Card Association

Heating, Air-conditioning, & Refrigeration Distributors International Independent Bakers Association

Independent Community Bankers of America Independent Electrical Contractors

Independent Insurance Agents and Brokers of America Independent Office Products & Furniture Dealers Association Independent Professional Seed Association

Industrial Fasteners Institute Institute of Real Estate Management

Institute of Scrap Recycling Industries, Inc. International Association of Movers (IAM) International Association of Plastics Distribution


International Caterers Association International Council of Shopping Centers International Dairy Foods Association International Door Association

International Engraved Graphics Association International Flight Services Association International Foodservice Distributors Association International Franchise Association

International Housewares Association International Warehouse Logistics Association

ISD - International Sealing Distribution Association Job Creators Network

Juice Products Association Manufactured Housing Institute Manufacturer & Business Association

Marine Retailers Association of the Americas

Material Handling Equipment Distributors Association Metals Service Center Institute


National Apartment Association

National Association for the Self-Employed National Association of Chain Drug Stores

National Association of Electrical Distributors ("NAED") National Association of Flour Distributors

National Association of Landscape Professionals National Association of Manufacturers

National Association of Professional Insurance Agents NATIONAL ASSOCIATION OF REALTORS®

National Association of Social Workers National Association of Wheat Growers National Association of Wholesaler-Distributors

National Association of Women Business Owners National Automatic Merchandising Association (NAMA) National Automobile Dealers Association

National Beer Wholesalers Association National Candle Association

National Cattlemen's Beef Association National Community Pharmacists Association National Confectioners Association

National Cotton Council

National Cotton Ginners Association National Cottonseed Products Association National Council of Agricultural Employers


National Council of Chain Restaurants National Council of Farmer Cooperatives National Council of Textile Organizations National Electrical Contractors Association National Franchisee Association

National Funeral Directors Association National Limousine Association National Marine Distributors Association

National Marine Manufacturers Association National Mining Association

National Multifamily Housing Council National Newspaper Association National Office Products Alliance National Onion Association

National Pasta Association National Peach Council

National Pecan Shellers Association National Potato Council

National Propane Gas Association

National Ready Mixed Concrete Association National Retail Federation

National Roofing Contractors Association National RV Dealers Assoc (RVDA) National Small Business Association National Stone, Sand, and Gravel Association National Tooling and Machining Association National Waste & Recycling Association National Watermelon Association


News Media Alliance NFIB

North American Association of Food Equipment Manufacturers (NAFEM) North American Die Casting Association

NTCA-The Rural Broadband Association Office Furniture Dealers Alliance

Out of Home Advertising Association of America

Outdoor Power Equipment and Engine Service Association Pet Industry Distributors Association

Petroleum Equipment Institute (PEI)

Plumbing-Heating-Cooling Contractors—National Association Portland Cement Association

Precision Machined Products Association Precision Metalforming Association


Pressure Sensitive Tape Council PRINTING United Alliance Professional Beauty Association

Professional Electrical Apparatus Reconditioning League REALTORS® Land Institute

Retail Bakers of America

Retail Packaging Association (RPA) ROA

Roof Coatings Manufacturers Association S Corporation Association

Secondary Materials and Recycled Textiles Assoc. SHDA - Security Hardware Distributors Association Small Business & Entrepreneurship Council

Small Business Roundtable Society of American Florists

Society of Industrial and Office REALTORS® South East Dairy Farmers Association

Southeastern Lumber Manufacturers Association (SLMA) Spray Polyurethane Foam Alliance

SPRI, Inc.

Structural Insulated Panel Association The Airforwarders Association

The Association for Dressings and Sauces

The Association for Hose & Accessories Distribution (NAHAD) The Design-Build Institute of America

The Hardwood Federation

The Sheet Metal and Air Conditioning Contractors National Association (SMACNA) The Society for Maintenance and Reliability Professionals

The Transportation Alliance The Vinegar Institute

The Wholesale Florist and Florist Supplier Association (WF&FSA) Tile Roofing Industry Alliance

Tire Industry Association

Truck Renting and Leasing Association

U.S. Apple Association

U.S. Chamber of Commerce

U.S. Superyacht Association United Fresh Produce Association United Veterinary Services Assoc. US Rice Producers Association USA Farmers

Western Equipment Dealers Association Western Growers


Wine & Spirits Wholesalers of America Wine Institute


Winegrape Growers of America

Wireless Internet Services Providers Association (WISPA)


State/Regional Affiliates




Northeast Dairy Farmers Cooperatives Printing Industry Association of the South Pacific Seed Association

Pacific Printing Industries Association (PPI) Printing Industry Midwest

Southern Nursery Association, Inc.


Alabama AGC

Alabama Nursery & Landscape Association Alabama Propane Gas Association Alabama Restaurant & Hospitality Alliance

Central Alabama Chapter Independent Electrical Contractors


Arkansas Hospitality Association Arkansas Propane Gas Association


Alaska CHRR

Pacific Propane Gas Association


Arizona Builders Alliance

Arizona Chapter of the Associated General Contractors of America Arizona Nursery Association

Arizona Propane Gas Association Arizona Restaurant Association


ABC San Diego

Associated Builders and Contractors Central California Chapter


Associated Builders and Contractors Northern California Chapter Associated Builders and Contractors Southern California Chapter Associated General Contractors of America, San Diego Chapter California Agricultural Irrigation Association

California Alfalfa and Forage Association California Association of Wheat Growers California Bean Shippers Association California Cattlemen's Association California Cut Flower Commission California Fresh Fruit Association California Grain & Feed Association

California Landscape Contractors Association California Pork Producers Association California Restaurant Association

California Seed Association

California State Beekeepers Association California State Floral Association California Warehouse Assoc.

Family Winemakers of California

Grower-Shipper Association of Santa Barbara & San Luis Obispo Counties Monterey County Farm Bureau (CA)

Pacific Egg & Poultry Association

Pesticide Applicators Professional Association PHCC LOS ANGELES

Plant California Alliance

Plumbing Heating Cooling Contractors of California San Diego County Farm Bureau

Sweetpotato Council of California Ventura County Agricultural Association Western Propane Gas Association


AGC Colorado

Colorado Association for Viticulture & Enology (CAVE) Colorado Cattlemen's Association

Colorado Livestock Association

Colorado Nursery and Greenhouse Association

Colorado Podiatric Medical Assn. DBA Colorado Foot & Ankle Society Colorado Propane Gas Association

Colorado Restaurant Association IEC Southern Colorado Chapter



Connecticut Restaurant Association Propane Gas Association of New England

District of Columbia


Associated Builders and Contractors of Metro Washington Restaurant Association of Metropolitan Washington


ABC Delaware

DE Nursery & Landscape Association Delaware Contractors Association Delaware Restaurant Association Graphic Arts Association


AGC Florida East Coast Chapter

Central Florida Chapter Associated Builders and Contractors, Inc. Executives' Association of Greater Miami

Florida Cattlemen's Association Florida Citrus Mutual

Florida Nursery, Growers and Landscape Association Florida Podiatric Medical Association

Florida Propane Gas Association

Florida Restaurant & Lodging Association Independent Electrical Contractors Assoc-FECC

Independent Electrical Contractors Florida West Coast Chapter Marine Industries Association of Palm Beach County, Inc.

Marine Industry Association of Central Florida, Inc. Miami Marine Council

The South Florida AGC


Associated Builders and Contractors of Georgia, Inc. Atlanta Chapter, Independent Electrical Contractors, Inc. Georgia Green Industry Association

Georgia Podiatric Medical Association Georgia Propane Gas Association Georgia Restaurant Association Georgia Urban Ag Council


Independent Electrical Contractors, Georgia Chapter PHCC of GA Printing & Imaging Association of Georgia


General Contractors Association of Hawaii General Contractors Labor Association of Hawaii Hawaii Cattlemen's Council

Hawaii Restaurant Association Pacific Propane Gas Association Retail Merchants of Hawaii


Idaho Dairymen's Association

Idaho Lodging & Restaurant Association Idaho Nursery and Landscape Association Idaho Podiatric Medical Association Idaho Potato Commission

Idaho Retailers Association

Rocky Mountain Propane Gas Association


Central Illinois Builders of AGC

Illinois Grape Growers and Vintners Alliance Illinois Green Industry Association

Illinois Landscape Contractors Association Illinois Propane Gas Association

Illinois Restaurant Association

Midwest Independent Electrical Contractors (IEC) Association


Associated Builders and Contractors of Indiana/Kentucky IEC Indy

Indiana Beef Cattle Association

Indiana Nursery & Landscape Association Inc Indiana Propane Gas Association

Indiana Restaurant Association Indianapolis Landscape Association

Midwest Independent Electrical Contractors (IEC) Association


Associated Builders and Contractors of Iowa, Inc. Iowa Cattlemen's Association

Iowa Propane Gas Association


Iowa Restaurant Association Master Builders of Iowa

Plumbing, Heating Cooling Contractors of Iowa


Associated Builders & Contractors, Inc. Heart of America Chapter Kansas Livestock Association

Kansas City AGC

Kansas Restaurant & Hospitality Association Propane Marketers Association of Kansas


Associated Builders and Contractors of Indiana/Kentucky AGC of Western Kentucky

Associated General Contractors of Kentucky Kentucky Auto & Truck Recyclers Association Kentucky Cattlemen's Association

Kentucky Propane Gas Association Kentucky Restaurant Association Kentucky Retail Federation


Louisiana Propane Gas Association Louisiana Retailers Association Louisiana Restaurant Association

Louisiana Society of Association Executives Plumbing-Heating-Cooling Contractors of Louisiana


AGC Maine

Maine Landscape and Nursery Association Maine Potato Board

Maine Restaurant Association

Propane Gas Association of New England Retail Association of Maine


IEC Chesapeake, Inc.

Maryland Cattlemen's Association

Maryland Nursery, Landscape, and Greenhouse Association, Inc. Maryland AGC

Maryland Wineries Association

Mid-Atlantic Propane Gas Association



Restaurant Association of Maryland


AGC of Massachusetts

Massachusetts Marine Trades Association Massachusetts Nursery and Landscape Association Massachusetts Restaurant Association

Propane Gas Association of New England Retailers Association of MA


ABC Greater Michigan Chapter ABC Michigan

AGC of Michigan

Michigan Boating Industries Association Michigan Farm Bureau

Michigan Podiatric Medical Association Michigan Propane Gas Association Michigan Restaurant Association Michigan Retailers Association Michigan State Horticultural Society Potato Growers of Michigan, Inc.



Associated Builders and Contractors MN/ND Minnesota Nursery & Landscape Association Minnesota Propane Gas Association Minnesota Restaurant Association

Minnesota Retailers Association


Mississippi Cattlemen's Association

Mississippi Hospitality & Restaurant Association Mississippi Propane Gas Association


AGC of Missouri

Associated Builders & Contractors, Inc. Heart of America Chapter IEC of Greater St. Louis

Kansas City AGC

Lake of the Ozarks Marine Dealers Association


Missouri Propane Gas Association Missouri Restaurant Association Missouri Retailers Association Missouri Tire Industry Association


Montana Contractors Association

Montana Nursery & Landscape Association Montana Podiatric Medical Association Montana Restaurant Association

Montana Stockgrowers Association Rocky Mountain Propane Gas Association


AGC-Nebraska Building Chapter Nebraska Cattlemen

Nebraska Propane Gas Association Nebraska Restaurant Association


Associated Builders and Contractors, Nevada Chapter Nevada Propane Dealers Associations

Nevada Restaurant Association Retail Association Of Nevada

New Hampshire

Associated Builders & Contractors NH/VT Chapter Associated General Contractors of NH

New Hampshire Lodging & Restaurant Association New Hampshire Retail Association

Propane Gas Association of New England

New Jersey

Graphic Arts Association

New Jersey Landscape Contractors Association New Jersey Propane Gas Association

New Jersey Restaurant Association

New Mexico


Associated Builders and Contractors New Mexico New Mexico Propane Gas Association


New Mexico Restaurant Association NM Retailers Association

New York

Associated General Contractors of New York State New York Farm Bureau

New York Propane Gas Association

New York State Association of Plumbing, Heating, Cooling Contractors New York State Restaurant Association

New York State Vegetable Growers Association NY Wine Industry Association

North Dakota

Associated Builders and Contractors MN/ND North Dakota Hospitality Association

North Dakota Podiatric Medical Association North Dakota Propane Gas Association

North Dakota Retail and Petroleum Marketers Association


North Carolina

NC Foot & Ankle Society

NC Nursery & Landscape Association North Carolina Cattlemen's Association North Carolina Potato Association North Carolina Propane Gas Association

North Carolina Restaurant & Lodging Association Printing Industry of the Carolinas, Inc.


ABC Central Ohio

Boating Association of Ohio Graphic Media Alliance IEC Northern Ohio

Lake Erie Marine Trades Association Ohio Cattlemen's Association

Ohio Landscape Association Ohio Propane Gas Association Ohio Restaurant Association

Plumbing-Heating-Cooling Contractors of Ohio Southern Ohio Marine Trades Association



ABC of Oklahoma IEC-OKC

Oklahoma Cattlemen's Association Oklahoma Propane Gas Association Oklahoma Restaurant Association


ABC Pacific Northwest Chapter Oregon Association of Nurseries Oregon Cattlemen's Association Oregon Dairy Farmers Association Oregon Essential Oil Growers League Oregon Restaurant Association Oregon Seed League

Oregon Winegrowers Association Pacific Propane Gas Association


Associated Builders & Contractors, Keystone Chapter Associated Builders and Contractors of Western PA

Central Pennsylvania Chapter Independent Electrical Contractors Constructors Association of Western Pennsylvania

General Building Contractors Association Graphic Arts Association

IEC of Northwest Pennsylvania PennAg Industries Association Pennsylvania Propane Gas Association

Pennsylvania Restaurant & Lodging Association

Puerto Rico

Puerto Rico Restaurant Association

Rhode Island

Propane Gas Association of New England Rhode Island Hospitality Association Rhode Island Marine Trades Association

South Carolina

South Carolina Propane Gas Association

South Carolina Restaurant & Lodging Association Printing Industry of the Carolinas, Inc.


South Dakota

AGC of South Dakota, Inc.

Associated General Contractors of South Dakota Building Chapter South Dakota Petroleum & Propane Marketers Association

South Dakota Retailers Association

South Dakota Retailers Association Restaurant Division


Associated Builders and Contractors- Greater Tennessee Mid-South IEC

Tennessee Farm Winegrowers Alliance Tennessee Hospitality Association Tennessee Nursery & Landscape Association Tennessee Podiatric Medical Association Tennessee Propane Gas Association


AGC Houston

Associated Builders & Contractors of Southeast Texas Associated Builders & Contractors of Texas Gulf Coast

Associated Builders & Contractors, Inc, Texas Mid Coast Chapter Boating Trades Association of Texas

CenTex Independent Electrical Contractors IEC Fort Worth/Tarrant County

Print & Imaging Association of MidAmerica RGV Chapter of IEC

Texas and Southwestern Cattle Raisers Association Texas Cattle Feeders Association

Texas International Produce Association Texas Nursery & Landscape Association Texas Propane Gas Association

Texas Retailers Association (TRA) Texas Restaurant Association

TEXO -The Construction Association


Associated Builders and Contractors of Utah Rocky Mountain Propane Gas Association Utah Cattlemen's Association

Utah Restaurant Association



Associated Builders & Contractors NH/VT Chapter Propane Gas Association of New England

Vermont Chamber of Commerce


IEC Chesapeake, Inc.

Virginia Nursery & Landscape Association Virginia Podiatric Medical Association Virginia Propane Gas Association

Virginia Restaurant Lodging & Travel Association Virginia Retail Federation


Associated Builders and Contractors of Western Washington Pacific Propane Gas Association

Washington Cattle Feeders Association Washington Cattlemen's Association Washington Restaurant Association Washington Retail Association

Washington State Nursery & Landscape Association Washington State Potato Commission

Washington Wine Institute Washington Winegrowers Association

West Virginia

West Virginia Hospitality & Travel Association West Virginia Nursery & Landscape Association West Virginia Propane Gas Association


Associated Builders and Contractors of Wisconsin Inc. Associated General Contractors of Greater Milwaukee Wisconsin Grocers Association

Wisconsin Landscape Contractors Association - Waukesha, WI Wisconsin Marine Association

Wisconsin Potato & Vegetable Growers Association Wisconsin Propane Gas Association

Wisconsin Restaurant Association



Rocky Mountain Propane Gas Association Wyoming Lodging & Restaurant Association Wyoming Stock Growers Association