Treasury Provides Guidance On Tax Ramifications of PPP Forgiveness

On November 19th, the US Treasury Department issued a Revenue Ruling 2020-27 reiterating  that expenses paid with PPP (Paycheck Protection Program) Loan proceeds that are forgiven will not be tax deductible.

Additionally, the Ruling clarifies the tax treatment for Companies that intend to apply for loan forgiveness in either 2020 or 2021.

The Ruling states that to the extent that the loan is intended to be forgiven, such expenses will not be tax deductible in 2020 regardless of when the application for forgiveness is submitted.

This Ruling precludes Companies that had intended to delay filing their forgiveness applications until 2021 from deferring the non-deductibility of its expenses until the following year.