The American Farm Bureau Federation recently sent a letter to Congress asking them to ensure farmers won’t pay taxes on forgiven Paycheck Protection Program loans. AFBF Senior Congressional Relations Director Pat Wolff says an IRS regulation means small businesses and farms would face a tax burden for using PPP funds.
"Congress needs to act, or farmers and ranchers and other small businesses are going to see a big and surprise tax increase when they file their taxes. When Congress passed PPP loans, they intended for them to be tax-free. The IRS issued regulations to the contrary, and Congress needs to fix it by passing a bill preferably before the end of the year," said Wolff.
PPP loans were meant to provide tax-free COVID assistance that makes payroll, rent, mortgage interest or utility expenses paid for using the funds tax-deductible as business expenses.
"If you do what the IRS proposes, and tax that loan, you’ve done something that’s contrary to what Congress meant and it takes away money that farmers need to operate their businesses," said Wolff.
With little time remaining in Congress for action, Wolff says the correction needs to be attached to other pending legislation.
"It’s not likely that there is going to be any free-standing bills moving, so the ask for today is that Congress incorporate this fix into any piece of legislation that is moving. That might be the appropriations bill, that might be a tag-on tax bill, or anything else that’s moving," concluded Wolff.