Dear Clients and Friends,

Yesterday, April 29, 2020, the Department of Treasury updated the PPP FAQs. Question 31 (which was added on April 23, 2020 providing guidance to all businesses but calling out public companies specifically) reminded all businesses of the certification of eligibility in the PPP loan application and the May 7, 2020 deadline for returning ineligible PPP loan proceeds. The PPP FAQ added Question 37 providing similar guidance to “businesses owned by private companies”(private equity or affiliated groups) and Question 39, alerting all companies who received a PPP loan in excess of $2million that the SBA will be reviewing the loan after the loan forgiveness application is submitted by the lender. If your company is publicly held, controlled by private equity or in an affiliated group, or received PPP loan proceeds over $2million you should formally document the eligibility certification.

We would be happy to assist management in the preparation of its required documentation. We are still awaiting final guidance on loan forgiveness from the SBA.

Please contact your BKM Sowan Horan team member with any questions.

For those of you that have received your PPP funding, the 8-week clock has started. I have attached a Loan Forgiveness Calculator with SBA interpretations incorporated through April 23, 2020. You can use the calculator to measure potential forgiveness. 

Given the surprise interpretations that occurred since the PPP was rolled out there is no doubt there will be some surprises in the SBA regulations governing the loan forgiveness due out later this week. We will update the calculator accordingly. 

Please contact your BKM Sowan Horan team member with any questions. 

Be sure your contact information is up to date here to continue receiving important COVID-19 accounting and tax updates.

The IRS and the SBA sent further clarification through its FAQs that the employers share of SSA can be deferred until the date The PPP loan is formally forgiven by the lender without interest or penalty. The forgiveness determination could be several weeks after the 8 week period  has eclipsed. YOU MUST CONTACT YOUR THIRD PARTY PAYROLL PROVIDER NOW.

Deferral of employment tax deposits and payments through December 31, 2020 FAQ 4

Can an employer that has applied for and received a PPP loan that is not yet forgiven defer deposit and payment of the employer’s share of Social Security tax without incurring failure to deposit and failure to pay penalties?

Yes. Employers who have received a PPP loan may defer deposit and payment of the employer’s share of Social Security tax that otherwise would be required to be made beginning on March 27, 2020, through the date the lender issues a decision to forgive the loan in accordance with paragraph (g) of section 1106 of the CARES Act, without incurring failure to deposit and failure to pay penalties. Once an employer receives a decision from its lender that its PPP loan is forgiven, the employer is no longer eligible to defer deposit and payment of the employer’s share of Social Security tax due after that date. However, the amount of the deposit and payment of the employer’s share of Social Security tax that was deferred through the date that the PPP loan is forgiven continues to be deferred and will be due on the “applicable dates,” as described in FAQs 7 and 8.

Please contact your BKM Sowan Horan team member with any questions. 

The CARES Act enacted a number of business and individual tax modifications affecting businesses and individuals impacted by COVID-19. Taxpayers should expect this to complicate their 2019 state tax reporting.

As our previous emails have laid out, some of the most important changes enacted were:

• Changes to business interest limitations.
• Net operating loss carryback opportunities.
• Changes to limitations on nonbusiness losses.
• Allowing qualified improvement property placed in service after December 31, 2017 to be treated as 15 year property eligible for federal 100% bonus depreciation.

All these changes have the important consequences on state income tax reporting. Is it reasonable to expect that states will conform to the CARES Act proposals? Given the impact that COVID-19 will have on most state budgets we believe that conformity will be slow and selective. Whether the federal tax  benefits of the CARES Act will be realized at the state level will vary from state to state.

As of April 15, 2020, below are the State by State due dates for 2019 and the due dates for the 1st and 2nd quarter estimated tax payments with some important considerations for States not waiving interest:

Please contact your BKM Sowan Horan team member with any questions.