Tax TimeWelcome to 2022 tax season! As the vast majority of businesses, small and large, were affected by the COVID-19 pandemic, many companies received support through the Paycheck Protection Program. However, there were many question marks with the Paycheck Protection Program, such as the timing of forgiveness and if eligible expenses are deductible for federal income tax purposes.

Timing of PPP loan forgiveness

As we all know, the Paycheck Protection Program (“PPP”) was created to assist businesses in paying their employees’ paychecks. If the funds received from PPP were used for qualified expenses, the amount of the loan was forgiven. Recently, the IRS released guidance on the timing of PPP Loan forgiveness. With some business owners not receiving their forgiveness letter in 2021, the question arose when the PPP loan will be forgiven for tax-exempt income purposes.

The IRS stated that taxpayers may treat such income as received or accrued when either:

  • expenses eligible for forgiveness are paid or incurred;
  • an application for PPP loan forgiveness is filed; or
  • PPP loan forgiveness is granted.

Thus, a taxpayer who submitted their application for forgiveness in 2021, but has not been granted forgiveness in the 2021 tax year, may choose the date of the forgiveness application, the date the forgiveness is granted, or the when eligible expenses are paid or incurred.

Expenses paid with 2020 PPP loans

Continue Reading How does receiving a PPP Loan impact filing my company’s taxes?

June 4 Update

House Bill H.R. 7010 passed the Senate and is now on its way to the President to sign. In addition to amendments relating to the PPP loan program, the bill provides that the deferral of employment taxes is now available even for taxpayers who have PPP loans that re forgiven under the CARES Act. This will allow taxpayers who obtain PPP loans and intend to apply for loan forgiveness to also defer the applicable employment taxes.

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On May 13, 2020, the Small Business Administration (“SBA”) issued anxiously awaited guidance outlining the agency’s perspective on the good faith certifications made by Paycheck Protection Program (“PPP”) applicants. (See, PPP Frequently Asked Questions, #46).

PPP recipients of loans less than $2 million found relief in the SBA’s statement that it would deem those recipients to have made the certification in good faith.

For those with PPP loans at or above $2 million, the SBA will require the recipient to adequately support its certification. If the recipient fails to do so, the SBA indicated it will seek repayment of the loan in full, but the agency will not pursue administrative enforcement or refer the matter to other agencies.Continue Reading SBA Issues New Guidance Addressing PPP Loan “Good Faith” Certification

Two Fort Myers tax lawyers will once again host a complimentary webinar to help the Southwest Florida community understand the tax law changes in light of the COVID-19 crisis. On Friday, May 1, 2020, from 12:00 to 1:00 pm, Lindsay Sablan, a journalist and WINK News morning anchor, will serve as moderator, with speakers attorney Shanthy Bala, the Tax Clinic Director and Supervising Associate at Florida Rural Legal Services, Inc., and Sara Qureshi, a business and tax attorney at Henderson, Franklin, Starnes & Holt, P.A., will present “Tax Law Changes Amidst COVID-19: Further Guidance Providing Relief to Individuals and Small Businesses” in association with the Lee County Bar Association and its Pro Bono Committee.

This one-hour session will go over recent updates and frequently asked questions regarding federal tax relief available for individuals and businesses during COVID-19, including questions that were submitted to the clinic after the last webinar on April 3rd. Questions may be submitted in advance by email to Shanthy.Bala@FRLS.org.

Continuing EducationContinue Reading May 1 Webinar to Provide Guidance on COVID-19 Tax Relief for Individuals and Small Businesses