Compact corporations that took PPP help may well encounter a tax challenge

A recent IRS ruling tying up a free finish in the 2020 economic-relief law could drive numerous compact enterprises to fork out taxes on federal government support intended to assistance via the pandemic.

The company on Nov. 18 claimed the businesses cannot deduct expenditures these types of as payroll and rent, paid out for with funds from the Paycheck Defense Plan of the CARES Act. These deductions are prevalent when those expenditures are paid for with income from running a enterprise.

The ruling hardened a divide concerning the Trump administration and the main tax writers in Congress, who have sought since the corona­virus outbreak produced an economic slowdown to be certain that aid to firms not be taxed.