Shifting Sands Here’s a briefing for non-tax professionals on how recent changes in regulations impact the financial health of companies. BY NICHOLAS SANCHEZ
W
HEN THE TAX CUTS AND
Jobs Act (TCJA) was enacted in 2017, it ushered in the most sweeping tax-law changes since the Internal Revenue Code was overhauled in 1986. To a tax practitioner like myself, it appeared to be a once-in-a-career sea change. Yet, tax laws remain constantly in flux. Take the CARES Act, for example. More formally known as the Coronavirus Aid, Relief, and Economic Security Act of 2020, it introduced many new tax provisions in an effort to soften the
24 The Financial Manager • November/December 2020
blow of the COVID-19 pandemic. Even if you are a non-tax professional – working outside of your company’s tax office – it pays to have a basic understanding of some notable changes of late in order to understand their implications for your company. Let’s take a look at just a few of the important new developments to be aware of. PPP PECULIARITIES The CARES Act created the Paycheck Protection Program (PPP), which needs little introduction. PPP loan proceeds
may be used to pay payroll costs, certain employee healthcare benefits, mortgage interest, rent, utilities and interest on other existing debt. To the extent that the loans are used for these specific allowable expenses over the “covered period” of the loan (either the eight-week or 24-week period after loan origination), PPP loans may be forgiven. This forgiveness, which would otherwise result in cancellation of indebtedness income, is excluded from gross income under provisions of the CARES Act. However, many people question whether these expenses are still deductible.
