PPP Loans & Forgiveness Applications are Finally Due.
Borrowers who received their Paycheck Protection Program in April (and May) 2020 will need to apply for forgiveness ASAP. The PPP loans will convert to a standard five-year loan at 1% interest if the borrower does not submit their forgiveness application within ten months of the end of the covered period.
Let’s say, for example, you received your loan on April 20, 2020. The end of your covered period (if you elected 24 weeks) is October 4, 2020, and your due date is August 4, 2021. You must submit the application before then to avoid making payments.
Borrowers can still apply for forgiveness and have their loan forgiven if they apply after the deadline. The SBA has communicated they will refund the amounts paid, but there is no formal guidance supporting that process. We recommend you submit your forgiveness application ASAP.
Reach out to firstname.lastname@example.org for help.
SBA May Launch Direct Forgiveness Portal
Bizjournals reported last week that the SBA might launch a new forgiveness portal that would allow some borrowers to apply for forgiveness directly to the SBA instead of their lender. Erik Asgeirsson, President and CEO of the Association of International Certified Professional Accountants (AICPA) in an online Town Hall on July 8, was quoted saying, “It seems like they are going to have a direct forgiveness tool, and that’s what I would expect if the lender is no longer in existence — that would be a great option.”
Lisa Simpson, Vice President of Firm Services at AICPA, said in the town hall that some lenders might be waiting on the SBA for this portal as they deal with their own forgiveness backlogs.
We will keep you updated as we learn more.
Employee Retention Credit
The Employee Retention Credit (ERC) is a refundable tax credit established with the CARES Act to keep people employed. The ERC has been expanded and enhanced with the passage of the Consolidated Appropriations Act of 2020 and the American Rescue Plan of 2021 (ARPA). It’s worth up to $5,000 per employee in 2020 and up to $28,000 in 2021 ($7,000 per quarter).
Businesses become eligible as a result of a partial or full suspension of operations due to a COVID-19 related shutdown order or a decline in gross receipts (50% for 2020 and 20% for 2021). CLICK HERE for more details.
Check your Q2 revenue now to determine if you are eligible for ERC. If your Q2 2021 receipts are less than 80% of 2019, you may qualify for up to $7,000 per employee for the 2nd and 3rd quarters of 2021. If you are eligible or are not sure and want to speak with us to find out, email email@example.com and someone will be happy to help.
Remember, you can not use the same wages for ERC that were used to have your PPP loan forgiven. We have a team of analysts ensuring businesses maximize the amount of assistance available with cross eligibility of COVID-19 relief programs; contact us for assistance.
Loan Necessity Questionnaire for PPP Loans >$2M officially withdrawn by SBA
In November of 2020, the Small Business Administration introduced new forms for Paycheck Protection Program borrowers with loans greater than $2 million — Form 3509 for for-profit borrowers and Form 3510 for non-profit borrowers.
In December of 2020, the American General Contractors Group filed a lawsuit challenging the legality of the questionnaire and the process used by the SBA to develop, approve and publish it. The AGC announced on June 23rd that the SBA intended to withdraw the questionnaire.
In a notice dated July 9th, the SBA officially announced the questionnaires were no longer required.
IRS readies nearly 4 million refunds for unemployment compensation overpayments
Last week, the IRS announced it was depositing another round of refunds to nearly 4 million taxpayers who overpaid their taxes on unemployment compensation received last year. The American Rescue Plan Act of 2021, which became law in March, excludes up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
Most taxpayers do not need to do anything. There is no need to call the IRS. However, if, as a result of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return.
Don’t hesitate to get in touch with us with any questions.
We have had a dedicated team in place for over a year working to ensure our clients are securing the maximum amount of eligible relief while complying with the cross eligibility rules of COVID-19 relief programs. If you are interested in a complimentary phone call to discuss your eligibility or questions on any COVID-19 relief programs, please email firstname.lastname@example.org.