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COALITION OF FRANCHISEE ASSOCIATIONS MEETS WITH THE
U.S. DEPARTMENT OF TREASURY TO URGE DEDUCTIBILITY OF PPP LOANS
Coalition of Franchisee Associations Members from Hotel, Salon, Food Industry Discuss Negative Impact of Tax Notice on Their Businesses
WASHINGTON, D.C. (Sept. 18, 2020) – The Coalition of Franchisee Associations, the largest franchisee-only trade association in the country, announced today their exclusive meeting with U.S. Department of Treasury representatives to express the negative impact that not being able to deduct items purchased with Paycheck Protection Program (PPP) funds is having on their businesses.
When Congress created the PPP, its intent was for business expenses paid by PPP to be tax deductible. However, guidance from the IRS states that expenses paid for with PPP funds are now taxable, eliminating the assistance intended by the PPP program.
“This legislation was pulled together quickly due to the catastrophic nature of the pandemic. Tax legislation is complicated, and we have seen unintended drafting errors in the past,” said John Motta, chairman of the CFA. “The omission of a provision to make the expenses associated with PPP forgiveness deductible puts a taxpayer in the same place as if the law were silent. Clearly, Congress did not intend that result.”
IRS’ notice, issued Aug. 28, interprets items purchased with PPP funds as non-deductible business expenses. By disallowing these business deductions, the IRS is, in effect, taxing forgiven PPP dollars and consequently reducing the actual amount of aid extended to desperate franchisees.
“Franchisees are in a place of unprecedented economic distress. Congress and the administration needs to do right by these small-business owners who are struggling through no fault of their own,” said Misty Chally, executive director of the CFA. “The Paycheck Protection Program has been a lifeline to America’s franchisees, and the administration needs to support the intent of the law.”
Franchisee representatives included brands: Dunkin’, Asian American Hotel Owners Association, Supercuts, Buffalo Wild Wings and Job Creators Network.
U.S. Department of Treasury participants included: Dave Kautter, assistant secretary of the Treasury for Tax Policy; Jeff Van Hove, senior advisor, Office of Tax Policy; and Krishna Vallabhaneni, tax legislative counsel.
About Coalition of Franchisee Associations
The Coalition of Franchisee Associations (CFA) is the largest franchisee-only trade association in the country, who brings together some of the largest and most reputable independent franchisee associations. Founded in 2007 and comprised of franchisee association leaders dedicated to the development and growth of their own organization, the CFA is committed to protecting and preserving the value and integrity of franchised businesses. For more information, visit https://thecfainc.com.