Treasury and the SBA have issued precious little additional guidance since our Webinar last Thursday, April 30th. But there has been a little news.
The Good News
For purposes of the headcount and pay rate reduction tests, if you offer to rehire a laid off employee and that employee turns you down, then that employee will not count against you in the loan forgiveness reduction calculations. (FAQ 40)
The Bad News
Treasury is doubling down on their review of required borrower certifications. They haven’t issued any additional guidance, but they have given you seven more days to pay back your loan. You now have until May 14th. In reality, they are giving the SBA more time to issue more guidance on how they will review borrowers’ certifications and determine/restrict who is a qualified loan recipient. (FAQ 43)
Oh, What a Surprise. Not!
The most significant guidance that was issued did not help us in the calculation of loan forgiveness. It was to overrule the clear meaning of the Act and Congressional intent to make loan forgiveness taxable. This will be important when we file our 2020 tax returns a year from now. The guidance, IRS Notice 2020-32, is being challenged by most tax experts, Congress, and taxpayer groups. In our opinion, it will most likely be overturned. There’s not much point in discussing it now.
The calculation of loan forgiveness is a much more pressing issue since most of us are in the 8 week loan forgiveness period or soon will be. Treasury and the SBA’s failure to meet their mandated April 26th deadline is creating unnecessary burdens on PPP loan recipients.
We will keep you posted as soon as we get any relevant guidance.
Dave focuses on tax compliance and planning in the areas of income and estate tax. He is the tax partner for our automotive group but he’s also tapped for his expertise in real estate, manufacturing and professional services. He’s a whiz at estate and gift taxation and can create a customized approach to designing and implementing a successful exit plan for business owners.
You can reach Dave at 714-672-0022.
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