Anthony Sykes & Company

                 As the Internal Revenue Service ( IRS ) continues to catch up with its backlog of paperwork, there is a problem that is emerging. They have determined that a growing number of Paycheck Protection Program ( PPP ) loans have been improperly granted forgiveness. These loans were first established to assist small businesses that were adversely affected by the COVID-19 pandemic in paying certain expenses.           To have these loans forgiven, three criteria had to be met and that would allow the amount to be excluded from total income. For example, the loan had to be used to pay eligible expenses like rent, payroll, and utilities. However, upon further review, many of those who had their loans forgiven really do not meet those criteria. In situations like this, the loan amount is added to the total income for that year. This would require filing an amended tax return for that y...

          One of the lifelines for Small Businesses last year was the Paycheck Protection Program ( PPP ). There was also the Employee Retention Credit ( ERC ). Both were a part of the CARES Act in March 2020. Until the Taxpayer Certainty and Disaster Tax Relief Act of December 2020, they were essentially treated as separate. A business would have had to choose between one or the other. Now they can participate in both and the Internal Revenue Service ( IRS ) has released guidance on this subject.           Getting involved in both forms of relief is certainly an attractive option to most businesses. However, there is no “one size fits all” path to COVID-19 relief. PPP funds are still very difficult to acquire and this guidance allowing for ERC use is still new. Keeping good records and talking to your Qualified Tax Professional is essential at this point. This is a situation that is constantly changing, w...

                 For those who felt left out of the last 2 Paycheck Protection Program ( PPP ) openings, there is another chance. Starting on February 24, and continuing for 2 weeks, there is an exclusive window for Small Businesses with 20 employees or less to apply for a PPP loan. This is a particular group that has felt shut out of the program to this point.           This means that sole proprietors and independent contractors will have an even greater opportunity to receive this funding. However, the calculations that would increase the amounts of the loans for these Small Businesses will not be updated by the Small Business Administration ( SBA ) until March 1 . Specific written guidance will also be issued at that time. So it might be best for business owners to wait until that time so their applications will be subject to the most updated rules.

     The new COVID relief package ( Consolidated Appropriations Act, 2021 ) was signed on December 27. A Bill like this is unlikely to be changed after it has been signed. This means we have a much clearer understanding of what it will provide.      This is actually part of a larger piece of legislation that includes funding the government until September 2021. The COVID relief part of the law renews many of the programs created with the Coronavirus Relief and Economic Security ( CARES ) Act. For example, the Paycheck Protection Program ( PPP ) will continue. There is also a clarification that businesses can deduct expenses paid with funds from a forgiven PPP loan. There will be an extension of Federal Pandemic Unemployment Assistance ( FPUA ). This allows for Unemployment Insurance for Independent Contractors and those who work in the Gig Economy. This will go in effect 1 week later due to the delay in signing the Bill. Another round of Economic Impac...

     On December 20, new information about another round of COVID relief was released. This is certainly welcome news. Not everything is known at this time about the deal in Congress, but there are some details that have surfaced.      Unemployment assistance will be extended by about 11 weeks. However, it will only be at $300 per week. The Paycheck Protection Program ( PPP ) would continue and even expand to allow some businesses to apply for a second loan. It is still unclear if paying for business expenses with these loans is fully tax deductible. There would be a simplified process for those seeking a loan of less than $150,000. The Employee Retention Credit will continue. Student loan forbearance on Federal Student Loans would be extended. There is also a report of a provision to increase business meal deductions from 50% to 100%. Remember that nothing is final until it is written down and voted on, so a lot can still change.

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this series of posts has shed some light on what to do in different situations.      This post will give the best reason why a borrower might want to wait to submit their application. Some businesses have potential forgiveness reductions . Our last post discussed how fewer full-time employees or reductions in salary would impact the qualified expenses that could be claimed.      It may be best for some of these businesses to wait until after December 31 to file their applications to see if they were able to restore any of their employees and/or salaries. That would allow them to qualify for what are known as Safe Harbors and not have to reduce t...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this series of posts will shed some light on what to do in different situations.      The last post shared why a borrower might apply early and may want to wait. Another reason to wait is if the borrower has reductions to forgiveness due to fewer full-time employees or reductions in salary . It would be best to wait until the end of their covered period. This is because the reduction applies to all qualified expenses, not loan forgiveness. At the end of the covered period all the expenses can be added and then reduced by the necessary amount. If this is greater than the loan, a borrower can still qualify for full forgiveness. A Qualified Tax Professional is esse...

     The Paycheck Protection Program ( PPP ) has been a very useful tool to help many businesses stay open during these challenging times. However, there are many questions surrounding when is the best time to submit the applications for forgiveness of these loans. There are different ideas, but this post and the ones that follow will shed some light on what to do in different situations.      If you are using the last of funds or coming to the end of the forgiveness period, the application is not required until 10 months after the end of that forgiveness period. With that understanding, you do not have to wait. If the money’s all gone and you are confident that full forgiveness can be reached, it makes sense to apply. This is one reason why it makes sense to wait.      Applying early will not change forgiveness reductions . For example, if a business has reduced salaries of employees by 25%, that must be accounted for during the entire ...