Many small businesses took advantage of the programs provided by government efforts to ease the stress of shutdowns and lower than normal sales brought on by COVID-19. The most recognized is PPP, which was a loan when given and, if spent on specified expenses like payroll and rent, was completely forgivable and not taxable as income. After businesses received and spent the much needed funds, the IRS issued guidelines on the tax treatment of those forgiven funds and the related expenses incurred. IRS rules dictate that PPP funds will not be considered ‘income’ to the business but also removed the deductibility of expenses paid for with those forgiven funds. Therefore, with lowered allowable deductions the overall income will be higher than if the deductions were permitted. In short, the funds themselves are not taxable, but the taxable income overall goes up by the same amount of the forgiven funds, presuming the business spent all the money as directed. Read more to see how Ohio businesses can help support the initiative to challenge the IRS guidelines and make the expenses deductible after all.

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