As if life is not tough enough these days for small-business owners, the Internal Revenue Service and the U.S. Treasury Department are warning them that expenses associated with forgivable loans through the Paycheck Protection Program are not deductible.

This is a shocker, because the assumption was that since the loan itself was tax-free, the expenses associated with putting the mechanics of the loan into action would be deductible.

Regrettably, while this may make perfect sense to you and me, it has somehow eluded the powers that be at the IRS and Treasury, and, after all, these are the only powers that count.

So on top of everything else these businesses have endured because of the effects of the COVID-19 pandemic in this troubling year, being unable to deduct the costs would make a business’ income seem higher on paper, which would increase its tax bill.

When the PPP was rolled out at breakneck speed back in the spring, it had some flaws, but Congress clearly intended for recipients of these tax-free loans to be able to deduct expenses associated with the loans for tax purposes.

The IRS and Treasury have brazenly weighed in to contradict Congressional intent and announced borrowers who expect their PPP loan to be forgiven cannot deduct those expenses on their federal tax returns.

This could well result in a horrible surprise of thousands of dollars for some small-business owners. This is money that would further impact their bottom line and, in some cases, could put businesses over the edge.

Business organizations have launched a campaign for owners and officials of the affected companies to contact their members of Congress asking them to support legislation that has been introduced to correct the oversight of the original bill.

Senate Bill 3612 has been introduced by John Cornyn, R-Texas, and House Bills 6821 and 6754 have been introduced by George Holding, R-North Carolina, and Lizzie Fletcher, D-Texas, respectively.

These bills, which undoubtedly will be melded into one, will make sure the recipients of qualifying PPP loans are provided with the full benefits intended in the Coronavirus Aid, Relief and Economic Security (CARES) Act.

PPP loans required 60 percent of the proceeds be applied toward a business’ payroll expenses to qualify for forgiveness.

As the year progresses, tax professionals have been giving clients an option - either deduct the business expenses and potentially pay less in the last estimated tax payment due by Jan. 15, 2021, or don’t deduct but wind up paying more in the event Congress is not able to pass the corrective legislation.

Of course, for a business owner who has the wherewithal to pay higher quarterly taxes with the knowledge relief may be coming down the road, the choice is not that significant, but many small business owners are cash-strapped, living on the edge and every dollar is important.

Without clarity on forgiveness and deductibility, tax professionals will be wrangling with business owners’ returns well into 2021.

Guidance from legislators would also go a long way toward helping owners see how their cash flow will be looking going into the new year.

Passing this legislation as soon as possible will allow small-business owners more certainty as they focus on end-of-year planning.

We strongly urge the passage of this legislation to fulfill legislators’ original intent, and we want our readers to give these small businesses a boost by contacting their local legislator urging her to support the legislation.

Susan Wild, D-7th, is the member of Congress who represents Lehigh and Northampton counties.

You can contact her at 1607 Longworth House Office Building, Washington, DC, 20515 or by calling 202-225-6411.

***

Editor’s note: Bruce Frassinelli is a former newspaper editor and currently a contributor to the opinion page of the TIMES NEWS, Lehighton, our sister daily newspaper.