The $900 billion COVID-19 relief package passed Monday provides $284 billion for a revised Paycheck Protection Program (PPP) and clarifies that businesses can claim tax deductions for expenses paid for with forgiven PPP loans.
Paycheck Protection Program
The potential for the deductibility of PPP-funded expenses raises some practice questions, and traps for the unwary lurk in the details.
The year-end coronavirus relief and spending bill passed by Congress includes many tax provisions, including pandemic-related relief, extensions of expired provisions, and a large number of miscellaneous items, including temporary 100% deductibility for business meals.
The AICPA's Eileen Sherr, CPA, CGMA, MT, discusses recent IRS guidance regarding the tax treatment of loans under the SBA’s Paycheck Protection Program.
In a letter to Congress, dated Dec. 3, hundreds of national trade associations and their state and regional affiliates asked that legislation be enacted before the end of 2020 reversing the IRS’s position that amounts forgiven in loans under the PPP be nondeductible business expenses.
Two experts look at the issue of the deductibility of expenses paid with PPP loan funds and conclude that they should be deductible.
An AICPA letter suggests that the need for certain borrowers to complete a new form and provide extensive documentation supporting their request for relief funds be reconsidered and that other approaches be evaluated in assessing a borrower’s good faith certification.
The AICPA is asking its members to write to their senators and representatives in Congress in support of legislation that would mandate that anyone who receives a loan through the Paycheck Protection Program can deduct business expenses even when payment of those expenses results in loan forgiveness under the CARES Act.
The IRS issued guidance for taxpayers who pay otherwise deductible expenses with PPP loan funds, stating that even if the payment and PPP loan forgiveness happen in different tax years, the expenses are not deductible.
The AICPA is among 80 organizations that have signed a pair of letters to SBA, Treasury and congressional leaders calling on the agencies to temporarily suspend use of the new Paycheck Protection Program Loan Necessity Questionnaires.
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Businesses and not-for-profits that received $2 million or more in PPP loans must complete one of two new loan necessity questionnaires the SBA is sending to lenders for distribution to borrowers.
The Federal Reserve board announced that it lowered the minimum loan size for three of its Main Street Lending Program facilities in an effort to make the program available to more and smaller businesses.
Fears of a late-October PPP surprise came to the SBA’s attention because the program’s loan forgiveness application forms display an expiration date of “10/31/2020” in the upper-right corner.
PPP borrowers of $50,000 or less will have the opportunity to apply for forgiveness using a simplified application. Under the new process, these borrowers will be exempted from penalties for reduction of full-time employees or employees’ salary or wages.
The SBA released guidance clarifying that lenders must recognize the previously established extended deferral period for payments on the principal, interest and fees on all Paycheck Protection Program (PPP) loans, even if the executed promissory note indicates only a six-month deferral.
The US SBA issued a procedural notice designed to help PPP borrowers and their lenders understand their responsibilities when a borrower undergoes a change in ownership.
The forgiveness aspect of the Paycheck Protection Program remains a source of uncertainty for CPAs. This collection of facts and frequently asked questions can help CPAs understand what to do amid the confusion.
The IRS issued guidance telling lenders they should not file Form 1099-C, Cancellation of Debt, or furnish a payee statement to the borrower when a Paycheck Protection Program loan is forgiven.
The AICPA issued a news release renewing the organization’s call for the swift passage of legislation to extend and expand the Paycheck Protection Program (PPP).
The forgivable portion of a Paycheck Protection Program loan should be accounted for by the lender as an interest-bearing loan until payment for that loan is received from the SBA, according to new Technical Question and Answer Guidance issued by the AICPA.
