Congress established the Payroll Protection Program (PPP) to provide relief to small businesses during the COVID-19 pandemic as part of the CARES Act. They later passed the Paycheck Protection Program Flexibility Act which provided additional flexibility regarding the PPP loan forgiveness.
PPP funds are available to small businesses that were in operation on February 15, 2020 with 500 or fewer employees until the program funds are exhausted. Businesses with more than 500 employees in certain industries can also apply for loans. Eligible borrowers have until June 30, 2020 to apply for funding.
PPP loan recipients may request loan forgiveness if the funds are used for eligible expenses over a twenty-four week Covered Period and other criteria are met. Some businesses may elect an eight-week Covered Period. The Covered Period generally begins once a borrower receives their first disbursement from a lender, however, an Alternative Payroll Covered Period may be elected for certain payroll costs.
Eligible Expenses Include :
The Tax Warriors at Drucker & Scaccetti have written extensively on the PPP, its tax implications, and planning options. Below are our series of blogs and other resources business owners can use to help formulate a plan of action involving the PPP.
Contact us for PPP-specific consulting on help with obtaining loan forgiveness and other post-COVID-19 tax planning.
SBA & TREASURY RESOURCES
U.S. Treasury PPP Resource Page - includes links to interim final rules
Rev. Proc. 2021-20- on April 22, 2021, the IRS issued guidance which will allow taxpayers who filed tax returns on or before December 27, 2020 and reduced their deductions for expenses paid using forgiven Paycheck Protection Plan loan proceeds to elect to take those deductions in the following taxable year, rather than amending their current year return.
Rev. Rul. 2021-2 - on January 6th 2021, the IRS released guidance that allows taxpayers to deduct otherwise deductible expenses to the extent that the payment of such expenses results, or is expected to result, in the forgiveness of a Paycheck Protection Program Loan. This ruling obsoletes Notice 2020-32.
Notice 2020-32 - on April 30, 2020, the IRS issued guidance regarding the deductibility for Federal income tax purposes expenses paid with proceeds of Paycheck Protection Program (PPP) loans.
TAX WARRIOR BLOGS AND ALERTS
August 12, 2021 - New Portal Links PPP Borrowers Directly with SBA for Loan Forgiveness
February 23, 2021 - White House Announces Adjustments to PPP Program
February 3, 2021 - PPP Tax Treatment for State & Local Taxes
January 8, 2021 - Consolidated Appropriations Act 2021: A New Relief Package
November 20, 2020 - Further Clarity of Deductibility of Expenses
November 6, 2020 - Questionnaires for Loans Greater Than $2 Million
August 12, 2020 - Forgiveness FAQs and Applications
June 25, 2020 - You Can Apply for Forgiveness Early, But Buyer Beware
June 18, 2020 - Revised Forgiveness Guidance: New IFRs and Applications
June 5, 2020 - Paycheck Protection Flexibility Act (PPFA)
May 26, 2020 - Potential Changes & Forgiveness Regulations
May 18, 2020 - Loan Forgiveness Application Released by SBA
April 24, 2020 - Additional Funding and Eligibility Guidance Updated
April 16, 2020 - PPP Loans - New Guidance for Self-Employed Taxpayers
April 8, 2020 - PPP Loans - FAQs Issued and Updated
April 3, 2020 - PPP Loan - Regulations and Final Application Released
April 1, 2020 - PPP Loan Application and Guidance Released
March 31, 2020 - Need Liquidity? A PPP Loan Under the CARES Act May Help
TAX WARRIORS IN THE NEWS
May 13, 2020 -PPP Loan Forgiveness: How SBA FAQ 46 Affects Safe Harbor Amid Deadline Panic (Philadelphia Business Journal)
April 10, 2020 - CPAs Mobilize to Save Small Clients, Protect Their Firms (Bloomberg Tax)
April 10, 2020 - Forgive Me: How to Legally Borrow CARES Act Money and Not Pay It Back (DigBoston.com)
THIRD PARTY RESOURCES
May 16, 2020 - SBA Releases Paycheck Protection Program Loan Forgiveness Application: A Deep Dive (Tony Nitti, Forbes)