On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (the Act) became law as a part of the Consolidated Appropriations Act, 2021.
The Act provides $284.5 billion of additional funding for the Paycheck Protection Program (PPP). This means that if you missed out on the first round of PPP funding or are in need of additional funding to get you through this difficult winter or you think you might be, you are in luck.
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Mortgage Relief Programs
If you’re among those financially impacted by the coronavirus pandemic, you might be concerned about how to pay your mortgage or rent. Federal and state governments have announced plans to help struggling homeowners during this time. Read this to get information on what to do now, and what your options are for mortgage and rental relief.
Please follow the link below for further information-
PPP Forgiveness Application 3508EZ
PPP Forgiveness EZ Instructions
PPP Forgiveness Application
PPP Forgiveness Instructions
On May 15, 2020, the SBA published the Paycheck Protection Program Loan Forgiveness Application (SBA Form 3508). While the application clears up several of the outstanding questions that borrowers may have with regards to forgiveness eligibility, there are still some questions left unaddressed.
PPP Loan Forgiveness Update
As of 11/23/20 – the current ruling from the IRS is that PPP Loans that are forgiven will not be treated as income, per the legislation, but the expenses that the forgiven funds were used for (i.e. rent, wages, utilities, etc.) will not be eligible to offset income, essentially meaning the PPP loan funds could be taxable if the expenses that the funds were used for are not deductible. This treatment runs counter to the intentions of Congress when they created and passed this legislation, but the IRS has repeatedly stated that it is the responsibility of Congress to correct this through updated legislation. There is bi-partisan support to make the needed corrections, but it won’t happen in a stand-alone bill & therefore would need to be attached to a larger bi-partisan effort (i.e. PPP-2, stimulus bill, or budget bill) which has been difficult to achieve and may not come about in the few legislative days remaining in this lame duck congress.
Where that does leave us – there is still great confidence that something will get passed perhaps in the early part of 2021 that will be made retroactive and include the specific language that would allow for deduction of expenses that forgiven PPP loan funds were used for. These are the three options as I see them:
My recommendation is to Wait & See – as I believe that they will get something passed at the Federal level that will allow deductibility as it has a lot of bi-partisan support and many lobbying for this to occur. PPP-2 is still a possibility, but would be much more targeted (think hospitality industry) than the first round, but this would bode well for the needed fix for deductibility to be included with this legislation.
One of the primary drivers of my confidence that deductibility will be allowed is the reality that these funds/expenses if disallowed would result in double taxation as both the company/owners would be taxed and the individuals would be taxed on the same amounts, which is a problem.
Though, I am not recommending moving forward with the application for forgiveness at this time there may be a situation where due to a lender requesting the application, imminent sale of the business or simply a need for some certainty around business and tax planning there may be a need to move forward. If this is the case, I am available to assist as needed - please reach out to me and we can setup some time to discuss and plan for navigating the process together.
The IRS started sending out stimulus checks in mid-April and did not have safeguards in place to prevent sending checks to those who had recently passed away. While both President Trump and Secretary of the Treasury Steve Mnuchin had publicly stated the IRS would be requesting the checks issued to decedents to be returned, the IRS did not issue guidance until recently on how to return such checks. The information below comes from the IRS Economic Impact Payment Information Center.
If you received a paper stimulus check on behalf of a deceased individual:
Write “Void” in the endorsement section on the back of the check.
Mail the voided Treasury check immediately to the appropriate IRS location.
Don’t staple, bend, or paper clip the check.
Include a note stating the reason for returning the check.
If you received a paper stimulus check and have cashed it or if the payment was a direct deposit:
Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
Write on the check/money order made payable to “U.S. Treasury” and write 2020 EIP, and the taxpayer identification number (social security number, or individual taxpayer identification number) of the recipient of the check.
Include a brief explanation of the reason for returning the EIP.
While guidance has been issued as to how to return these checks, the IRS has not publicly laid out consequences for not returning a decedent’s stimulus check.
Mailing address for Minnesota Residents:
Kansas City Internal Revenue Service
333 West Pershing Rd
Kansas City, MO 64108