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.

     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 ...

When the Paycheck Protection Program ( PPP ) was first announced, many saw it as the answer to their COVID-19 related business issues. There was a rush to get applications in, especially when it was revealed that these loans may not have to be paid back if certain requirements were met. Now, as the dust begins to settle, we are getting a better idea about who makes these decisions. The Small Business Administration ( SBA ) has a great deal of discretion over how a PPP loan will be paid back. They decide if the loan can be forgiven or how much will be paid back. In addition, there is currently little guidance on how to appeal their written final decisions. The only SBA decisions that can be appealed are if the borrower was determined ineligible for a PPP loan, for the loan amount received, if the loan amount was used for ineligible purposes, or if the borrower was ineligible for full or partial loan forgiveness. This process is handled by a special SBA office. They will not rev...

     One of the key features of the Paycheck Protection Program ( PPP ) was that these business loans could be partially or entirely forgiven. This would be based on whether the funds were spent on wages, keeping employment levels the same as they were before the COVID-19 pandemic, and other factors. Of course, proof would have to be provided that these requirements have been met and an application needs to be submitted. All of that has now been put on pause.      Those Forgiveness Applications will not be accepted until August 10 at the earliest. Part of the reason is that the Treasury Department has not yet issued the final guidance on those applications. That may be because the US Senate is looking into another round of economic stimulus, which will certainly change the procedures related to forgiving PPP loans. What will happen remains to be seen, so for now we will all need to exercise some patience.

     Soon information related to Paycheck Protection Program ( PPP ) loans will be made public. Specifically, the names of businesses that received over $150,000. It will also include business names, types, and addresses. This list may not be very long since the majority of loan borrowers were under $150,000. However, 75% of the $500 billion in loans went to businesses that were approved for more than $150,000.      In the beginning, no information was going to be released. When the first round of loans ran out in record time, many insisted on disclosure of who was receiving the funds. This was not expected, and the results of knowing these details is going to make some uncomfortable. There will now be a very public scrutiny for some.

     With all of the problems that the newly created Paycheck Protection Program ( PPP ) has faced, you can add large amounts of fraud to the list. After the first round of payments, the Department of Justice began to investigate and prosecute fraudulent claims regarding businesses that did not exist, or fictional employees.       In these cases, individuals were able to create documentation that allowed them to receive loans. However, state agencies told investigators about the lack of actual Payroll records to prove that these businesses were active. These criminals are quickly being caught and charged with counts of Bank Fraud among other counts. While it may be tempting, in the end it never pays to cheat and steal. You always end up paying back a lot more.

     For those looking for help with COVID-19 relief, it looks like more help is on the way. Last week the Paycheck Protection Program ( PPP ) Flexibility Act of 2020 was passed in Congress. This will improve the PPP experience by making rules for getting loan forgiveness a little easier.      One major change is the amount of time given to businesses to use the proper loan amount. Originally, business owners had 8 weeks from the time the loan was given to spend 75% of it on Payroll costs. If this obligation was met, it could qualify for complete loan forgiveness. Many felt this was unrealistic considering the need to pay rent and utilities. With the PPP Flexibility Act, borrowers can take up to 24 weeks to spend 60% on Payroll costs and potentially reach the same outcome.      This new Flexibility Act changes many aspects of how PPP is calculated. It now becomes a more attractive option for COVID-19 relief as it was intended, i...

        Many Small Businesses are anxiously awaiting an opportunity to have their share of some of the COVID-19 relief provisions that have been made by the Coronavirus Relief and Economic Security ( CARES ) Act. The most well-known is the Paycheck Protection Program ( PPP ). We have written about this program in the past. One reason it is so attractive to businesses is that a loan of up to $10 million can be forgiven if the owner follows some simple rules and applies all of the money to the firm and its employees. Now the Internal Revenue Service ( IRS ) has weighed in on how this changes what a business can deduct.           During normal times, a business can deduct things like wages and rent. These are the same expenses the loan in the PPP is expected to be used for. With that understanding, the IRS has now stated that anything the PPP is used for cannot be deducted from taxes for the business. The reasoning i...

           The emergency funding provided by the Paycheck Protection Program ( PPP ) seems to have slowed down. There are billions of dollars still available, but lenders say that demand is down. Many businesses put in loan applications with different banks, when one got approved they pulled the other ones. Some businesses decided that they no longer qualified, while others did not want to share necessary payroll details in their applications.           A number of the businesses that are no longer interested in this program cite confusion for removing their applications or declining their loans. The Coronavirus Relief and Economic Security ( CARES ) Act made the PPP possible. It was the Small Business Administration ( SBA ) that stated 75% of the loan must be used for employees by the end of June in order to qualify to be forgiven. Many industries have no work to pay the employees for. How can these funds b...

On April 27, the Paycheck Protection Program ( PPP ) restarted with $310 Billion dollars ready to loan to Small Businesses. This time there are promises to learn from earlier mistakes. For example, $60 Billion is reserved for smaller community banks, and no bank can process more than $60 Billion in loans. This is thought to create a sense of equality and pacing for all businesses looking to seek relief. The Small Business Administration ( SBA ) is trying to keep large corporations from squeezing out loan access for small shops. How did things work out the first week? There were widespread complaints about the online application system. E-Tran continues to crash and is overloaded by the number of users and applications that are uploaded. With that said, the SBA claimed it processed 100,000 loans from 4,000 lenders on Monday alone. Community banks feel that this is worse than their first try. While there is a limit of $10 Million per application, many feel that this funding will...

         It has been well documented that there is a lot of confusion and chaos in the world today. Even as the government does its best to provide support, there are still more questions than answers. That is especially true for Small Business owners. There are a variety of programs available for Coronavirus relief. Do you know about them? Do you know how to apply for them? We are working remotely so that we can support you and be a guide through the process. Please fill out our simple form so we can show you the options available.

One of the biggest parts of the stimulus bill known as the Coronavirus, Aid, Relief, and Economic Security ( CARES ) Act has stopped in its tracks. The Paycheck Protection Program ( PPP ) was meant to help Small Businesses (business with less than 500 employees) not lay off their employees. This would be done through low interest loans made by the Small Business Administration ( SBA ). The applications would come through various lenders. This program started with $349 billion dollars. It sounded like a good idea. What happened? The PPP will no longer be accepting applications. They claim to have already approved 1.6 million loan applications. How did we get here in 2 weeks? Not much is known considering there is still a great amount of confusion surrounding the program. Some who were approved early on are still waiting for their money. Banks are still holding on to thousands of applications, even as the program has closed its doors. Hotel chains were allowed to file for this p...

         On March 27, the Coronavirus Aid, Relief and Economic Security ( CARES ) Act was passed and signed into law. It is the largest financial support package in United States history and has over 800 pages detailing the relief that will be provided to Taxpayers and businesses. One area that is gaining interest is the Paycheck Protection Program ( PPP ).           The goal of the PPP is to help businesses provide economic stability for their employees. This is done through federally backed loans, in partnership with the Small Business Administration ( SBA ), that are to be used for certain payroll expenses. This would include salary (for those who make less than $100,000/year), payment of state and local taxes on the salary, cost of vacation, medical, family, and sick leave, and the cost of health care benefits. It can also be used to pay rent and utilities. This loan is intended to cover costs from Febru...