Tax Monitor

Nontransparent PPP Loan Necessity Process Presents Substantial Risks for Borrowers and Lenders

November 30, 2020

All borrowers under the Paycheck Protection Program (PPP) certified that “current economic uncertainty makes this loan request necessary to support the ongoing operation of the Applicant.”¹  The Small Business Administration (SBA) has long planned to review borrower eligibility for all loans in excess of $2 million, in addition to other loans as appropriate, following a lender’s submission of the…

IRS Release -- Expenses Covered By PPP Loan Are Not Deductible in 2020 Regardless of the Timing of Forgiveness

November 19, 2020

The IRS has released guidance on the tax issues related to forgiveness of a PPP loan.  In general, under the CARES Act, forgiveness of a PPP Loan is excluded from gross income for federal income tax purposes.  The IRS has clarified that expenses covered by PPP Loan proceeds, namely payroll, are not deductible if the PPP Loan is forgiven.  IRS Notice 2020-32.
 
Recent IRS guidance takes…

SBA Simplifies Forgiveness for PPP loans of $50,000 or less

October 9, 2020

On October 8, 2020, the Small Business Administration (SBA) moved to simplify the forgiveness process for Paycheck Protection Program (PPP) loans of $50,000 or less. The SBA issued an interim final rule (ITF)¹  and a new application, Form 3508S,² and instructions.³  The relief does not constitute automatic forgiveness of a PPP loan.

The ITF forgiveness relief applies to borrowers with PPP loans of…

PPP Loans and Change of Ownership

October 6, 2020

Transactions involving changing the ownership of borrowers with outstanding Paycheck Protection Program (PPP) loans will be subject to new requirements under a procedural notice (Notice) issued by the Small Business Administration (SBA) on October 2, 2020.¹ The Notice addresses the circumstances under which lenders may approve a change of ownership, when and how SBA approval must be obtained, and…

NEW IRS GUIDANCE REGARDING § 163(j) LIMITATION OF BUSINESS INTEREST EXPENSE DEDUCTION

September 3, 2020

Business Interest Expense Deduction

The 2017 Tax Cuts and Jobs Act revised § 163(j) of the Internal Revenue Code (“Code”) to limit the deduction available for business interest expenses in a taxable year to an amount no greater than the sum of:

1. The taxpayer’s business interest income;
2. Thirty percent (30%) of the taxpayer’s adjusted taxable income (“ATI”); and 
3. The taxpayer’s floor plan financing…

COVID-19 Continues to Reshape Landlord and Tenant Relationships: CDC Halts Residential Evictions

September 2, 2020

The Department of Health and Human Services through the Centers for Disease Control and Prevention (CDC) issued an agency order (Order) halting evictions nationwide for many tenants of residential properties.¹ The Order is far reaching and comes with significant criminal sanctions for violation.  However, it is not a universal halt to residential evictions. Safely navigating the landlord and…

Proposed Regulations Provide Guidance on Entities That Can Use Small Business Accounting

August 31, 2020

Recent IRS proposed regulations outline new accounting method procedures for businesses who want to use the cash method for accounting and how they can qualify to do so under expanded statutory requirements.

The IRS recently issued proposed regulations to implement changes made to the permissible accounting method used by small businesses under the Tax Cuts and Jobs Act of 2017 (“TCJA”). While…

Refining Definitions of Owner-employees and Forgivable Occupancy Costs for PPP Loans

August 25, 2020

The Small Business Administration (SBA) continues to issue new rules defining forgivable costs under the Paycheck Protection Program (PPP). On August 24, 2020, the SBA issued interim final rule “Business Loan Program Temporary Changes; Paycheck Protection Program - Treatment of Owners and Forgiveness of Certain Nonpayroll Costs”¹ (IFR). The IFR answers three questions. The questions relate to the…

SBA updates FAQs to address agent fees and EIDL advances

August 13, 2020

On August 11, 2020 the Small Business Administration (SBA) updated two separate FAQs related to the Paycheck Protection Program (PPP). The updates address agent fees and Economic Injury Disaster Loans (EIDL).

The update to “Paycheck Protection Program Loans Frequently Asked Questions (FAQs)”¹  added two questions. First, the SBA stated that payment or nonpayment of fees to an agent or other third…

Borrowers now have an appeal process when adversely impacted by PPP loan reviews

August 13, 2020

The Small Business Administration (SBA) has issued a rule providing a limited appeal process under the Paycheck Protection Program (PPP) for borrowers adversely impacted by SBA reviews. The appeal process is available only after the SBA has engaged in a review of a PPP loan and only for a limited number of issues.

On August 11, 2020, the SBA issued an interim final rule titled “Appeals of SBA Loan…

SBA issues PPP Loan Forgiveness FAQs

August 6, 2020

As the August 10, 2020 date for the Small Business Administration (SBA) to begin processing forgiveness applications for loans made under the Paycheck Protection Program (PPP) approaches, the SBA has issued “Paycheck Protection Program Frequently Asked Questions (FAQs) on PPP Loan Forgiveness.” The FAQs address general forgiveness questions as well as questions related to payroll, non-payroll and…

SBA forgiveness portal to go live August 10

July 24, 2020

The Small Business Administration (SBA) announced its intention to launch a loan forgiveness portal for lenders on August 10, 2020. Loans made by lenders under the Paycheck Protection Program (PPP) to qualified borrowers may be forgiven in whole or in part if certain certifications as to the use of the loan proceeds are satisfied. While the SBA has issued forgiveness application forms and…