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Tax Monitor

Coronavirus/COVID-19

PPP Application Deadline Extended to May 31, 2021

There is still time to apply for a Paycheck Protection Program (PPP) loan. President Biden has signed the PPP Extension Act of 2021. The new deadline for borrowers to submit a PPP loan application is May 31, 2021. The Small Business Administration (SBA) will have until June 30, 2021 to process applications received before June 1, 2021.

The PPP was set to expire on March 31, 2021 but the SBA has…

UPDATED SBA Expands Loan Calculation Options and Eligibility

On March 3, 2021, the Small Business Administration (SBA) issued an interim final rule titled, “Business Loan Program Temporary Changes; Paycheck Protection Program-Revisions to Loan Amount Calculation and Eligibility” (IFR)1  and updated application forms related to the Paycheck Protection Program (PPP). The new rule will allow individuals who file an IRS Form 1040, Schedule C to calculate their…

White House proposes significant PPP changes midstream that will expand eligibility but temporarily limit access

Today the White House announced substantial proposed changes to the Paycheck Protection Program (PPP) some of which will take effect on February 24, 2021. On February 22, 2021, The White House Posted, “FACT SHEET: Biden-Harris Administration Increases Lending to Small Businesses in Need, Announces Changes to PPP to Further Promote Equitable Access to Relief” (Fact Sheet).1 The proposal includes a…

Certain State Tax Treatment Of PPP Loan Forgiveness And Deductibility Of Expenses

Federal Treatment of PPP Loan Forgiveness and Deductibility of Covered Expenses

One of the largest relief programs contained in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed March 27, 2020, was the Payroll Protection Program (“PPP”), which provided forgivable loan assistance to companies seeking to maintain their payroll during the COVID-19 pandemic. The CARES Act…

SBA begins to articulate the PPP loan necessity review process

On December 9, 2020, the Small Business Administration (SBA) issued an update to its Paycheck Protection Program Frequently Asked Questions (FAQs)1 to address why some Paycheck Protection Program (PPP) borrowers are receiving a Loan Necessity Questionnaire(Questionnaire). For over a month, draft questionnaires have been circulating and used by the SBA without official publication or…

Nontransparent PPP Loan Necessity Process Presents Substantial Risks for Borrowers and Lenders

All borrowers under the Paycheck Protection Program (PPP) certified that “current economic uncertainty makes this loan request necessary to support the ongoing operation of the Applicant.”1  The Small Business Administration (SBA) has long planned to review borrower eligibility for all loans in excess of $2 million, in addition to other loans as appropriate, following a lender’s submission of the…

IRS Release -- Expenses Covered By PPP Loan Are Not Deductible in 2020 Regardless of the Timing of Forgiveness

The IRS has released guidance on the tax issues related to forgiveness of a PPP loan.  In general, under the CARES Act, forgiveness of a PPP Loan is excluded from gross income for federal income tax purposes.  The IRS has clarified that expenses covered by PPP Loan proceeds, namely payroll, are not deductible if the PPP Loan is forgiven.  IRS Notice 2020-32.
 
Recent IRS guidance takes…

SBA Simplifies Forgiveness for PPP loans of $50,000 or less

On October 8, 2020, the Small Business Administration (SBA) moved to simplify the forgiveness process for Paycheck Protection Program (PPP) loans of $50,000 or less. The SBA issued an interim final rule (ITF)1  and a new application, Form 3508S,2 and instructions.3  The relief does not constitute automatic forgiveness of a PPP loan.

The ITF forgiveness relief applies to borrowers with PPP loans of…

PPP Loans and Change of Ownership

Transactions involving changing the ownership of borrowers with outstanding Paycheck Protection Program (PPP) loans will be subject to new requirements under a procedural notice (Notice) issued by the Small Business Administration (SBA) on October 2, 2020.1 The Notice addresses the circumstances under which lenders may approve a change of ownership, when and how SBA approval must be obtained, and…

COVID-19 Continues to Reshape Landlord and Tenant Relationships: CDC Halts Residential Evictions

The Department of Health and Human Services through the Centers for Disease Control and Prevention (CDC) issued an agency order (Order) halting evictions nationwide for many tenants of residential properties.1 The Order is far reaching and comes with significant criminal sanctions for violation.  However, it is not a universal halt to residential evictions. Safely navigating the landlord and…

Refining Definitions of Owner-employees and Forgivable Occupancy Costs for PPP Loans

The Small Business Administration (SBA) continues to issue new rules defining forgivable costs under the Paycheck Protection Program (PPP). On August 24, 2020, the SBA issued interim final rule “Business Loan Program Temporary Changes; Paycheck Protection Program - Treatment of Owners and Forgiveness of Certain Nonpayroll Costs”1 (IFR). The IFR answers three questions. The questions relate to the…

SBA updates FAQs to address agent fees and EIDL advances

On August 11, 2020 the Small Business Administration (SBA) updated two separate FAQs related to the Paycheck Protection Program (PPP). The updates address agent fees and Economic Injury Disaster Loans (EIDL).

The update to “Paycheck Protection Program Loans Frequently Asked Questions (FAQs)”1  added two questions. First, the SBA stated that payment or nonpayment of fees to an agent or other third…

 

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