Throughout 2020, Congress released numerous pieces of legislation designed to lessen the impact of the COVID-19 disruption, particularly for organizations that struggled to maintain their headcounts. One provision involved a refundable credit that organizations could apply against qualified wages and certain health insurance costs – the Employee Retention Tax Credit (ERTC).
Topics: IRS, tax relief, tax credit, COVID19, Coronavirus, CARES Act, PPP, PPP Loan Forgiveness, Consolidated Appropriations Act, Employee Retention Tax Credit, The Act, ERTC
The Paycheck Protection Program (PPP) created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and extended by the December 2020 year-end appropriations bill provides a direct incentive for small businesses to keep their workers on payroll. It is backed by the Small Business Administration (SBA) and provides potentially forgivable, low-interest loans for small to medium-sized organizations who can demonstrate expenses were used toward retaining their headcount.
Topics: Independent Contractor, COVID19, Coronavirus, Coronavirus Aid, Relief, and Economic Security Act, PPP Loan, Small Business Administration, PPP Loan Forgiveness, Payment Protection Program
On February 22, the White House announced changes to the Paycheck Protection Program that give exclusive access to certain small businesses.
Year-end legislation provided additional funding and an extension of the Small Business Administration’s Paycheck Protection Program (PPP) for the first quarter of 2021. Effective February 24, the Biden-Harris administration is instituting a 14-day holding period on new PPP applications (sometimes referred to as PPP2 loans) for businesses with 20 or more employees. The goal of the hold is to lessen the PPP competition for small businesses and sole proprietorships that may have had difficulty accessing the federal funds previously.
Topics: Election, COVID19, Coronavirus, employees, CARES Act, Paycheck Protection Program, PPP Loan, PPP Loan Forgiveness, Biden, PPP2
The Employee Retention Tax Credit (ERTC) was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but limitations on its availability tempered interest in the relief measure. That is about to change, thanks to significant changes made on Dec. 27, 2020, by the Consolidated Appropriations Act, 2021 (the Act). The ERTC is now available to employers that received loans under the Payroll Protection Program (PPP), so any employer meeting ERTC eligibility criteria can benefit. Because employers potentially benefit from the enhanced ERTC on a retroactive basis, employers should immediately begin analyses to identify and calculate the value of retroactive or prospective ERTC benefits.
Topics: IRS, tax relief, tax credit, COVID19, Coronavirus, CARES Act, PPP, PPP Loan Forgiveness, Consolidated Appropriations Act, Employee Retention Tax Credit, The Act, ERTC
On Nov. 18, 2020, the IRS weighed in on whether expenses used to support Payroll Protection Program (PPP) loan forgiveness are deductible, assuming the forgiveness occurs in the year after the expenses are incurred. In Rev. Rul. 2020-27, the IRS doubled down on its previous position by holding that expenses incurred in the year prior to forgiveness are also nondeductible.
Topics: PPP, PPP Loan Forgiveness, Payment Protection Program
As businesses continue to grapple with effects from the COVID-19 pandemic, many are turning attention to forgiveness of Payroll Protection Program (PPP) loans. Borrowers do not need to repay PPP loans as long as they satisfy a variety of conditions, including a requirement to spend PPP loan proceeds on qualifying expenditures such as payroll and rent. The IRS previously clarified in Notice 2020-32 that these expenditures are nondeductible for tax purposes. But in many cases, PPP loans will not be forgiven by the end of the tax year. In that case, it is uncertain how to treat the expenditures in the year incurred, and what to do in the year of loan forgiveness.
Topics: COVID19, Coronavirus, PPP Loan, payment protection plan, PPP Loan Forgiveness, Nondeductible Expenses
Paycheck Protection Program (PPP) loan recipients will be under scrutiny when applying for forgiveness, which makes conscientious recordkeeping essential. Extensive documentation is needed for loan forgiveness applications to verify that loans are being used for their primary intended purpose: to retain the workforce and maintain payroll costs.
Topics: COVID19, Coronavirus, PPP Loan, payment protection plan, PPP Loan Forgiveness
