Following requests from bipartisan members of Congress, including Senate Finance Committee Chairman Chuck Grassley (R-Iowa), the Treasury Department today modified its decision to bar employers that continue providing health insurance to furloughed workers from claiming the employee retention tax credit (ERTC).
Treasury Secretary Steven Mnuchin conveyed the department’s response on the ERTC via letter received today.
“This is good news for small businesses and workers across the country. This decision will encourage employers to help employees keep their health insurance while temporarily furloughed due to the shutdown. The decision also aligns Treasury’s policy with the original congressional intent behind the employee retention tax credit. I appreciate Secretary Mnuchin’s responsiveness,” Grassley said.
Separately, the department responded to a bipartisan congressional request, including Chairman Grassley, regarding business deductions related to the Paycheck Protection Program (PPP).
“We still need to fix the issue of deducting business expenses related to the application for PPP loans. It’s fully my intention for that issue to get resolved quickly, whether administratively or legislatively, so small businesses maintain as much liquidity as possible during this difficult period,” Grassley continued.
On Monday, Grassley joined Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) and House Ways & Means Chairman Richard E. Neal (D-Mass.) requesting the change to Treasury’s interpretation of the ERTC established in the CARES Act.
In the following days, the trio separately pushed for a change in the IRS’ and Treasury Department’s decision to disallow businesses applying for PPP loans from deducting related expenses, a decision that also contradicted congressional intent.
Grassley also joined colleagues to introduce legislation that would mandate a change in the Treasury Department’s and the IRS’s position and clarify the small business expense deductions under the Paycheck Protection Program.