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Small businesses that took PPP aid may now face a punishing tax bill

Source: https://chicagotribune.com/business/ct-biz-paycheck-protection-loan-taxes-irs-20201130-65sw7npyvzfwrc24omigj7q4de-story.html - Dec 2, 2020

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.

Category: General Business