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What to know about safe harbor rules for small businesses claiming Paycheck Protection Program deductions

Posted on May 24, 2021

According to CPA Mike Poynter, both the Treasury Department and the IRS have issued new procedural guidelines for businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct any of the original eligible expenses.

Under prior guidance, businesses that received PPP loans to cover payroll costs, interest on covered mortgage obligations, covered rent obligation payments, and covered utility payments could not deduct corresponding expenses.

“With the enactment of the Consolidated Appropriations Act of 2021, however, businesses now may claim these deductions even though they received PPP loans to cover original eligible expenses, says Poynter.

Businesses can now use the safe harbor provided by this guidance to deduct those expenses on their returns for the immediately subsequent year.

“If your business has already filed returns for that year, you can be sure the Small Business CPAs at TEIPEN CPA Group can help you file an amended return,” adds Poynter. “We have the correct forms and will be happy to help you simplify the process.”

More information on COVID-19 related tax relief for business can be found on IRS.gov, or my contacting your TEIPEN CPA.