PAYCHECK PROTECTION PROGRAM

PAYROLL PROTECTION PROGRAM
 

PPP StuffCongress 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 :

  • Payroll—Salaries and Wages; Including Health Benefits as well as Parental, Family, Medical and Sick Leave.
  • Rent – If the lease agreement was signed before February 15, 2020.
  • Mortgage Interest - If the mortgage was signed before February 15, 2020.
  • Utilities – Electricity, Gas, Water, Internet, etc. if the service contract was signed before February 15, 2020.

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 FAQ's on the Payroll Protection Program 

U.S. Treasury PPP Resource Page - includes links to interim final rules

Paycheck Protection Program Borrower Application Form

Paycheck Protection Program Loan Forgiveness Application and Instructions 


IRS GUIDANCE 

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 14, 2021 - Reduced Your Forgiveness for the EIDL Advance?  You’re Entitled to a Refund + Interest

January 8, 2021 - Consolidated Appropriations Act 2021: A New Relief Package

November 20, 2020 - Further Clarity of Deductibility of Expenses

November 11, 2020 - Updated Guidance: New Application, "Owner" Clarification, New Strings for Nonpayroll Costs & Related Parties, and Some FAQs

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 11, 2020 - Revised Guidance for PPP Forgiveness Begins; More Expected to Follow

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

AICPA PPP Resource Page

May 16, 2020 - SBA Releases Paycheck Protection Program Loan Forgiveness Application: A Deep Dive (Tony Nitti, Forbes)