May 1, 2020
Thank you for attending our webinar today on Loan Forgiveness Under the Paycheck Protection Program (PPP). As promised, here is the
video
and
handout
.
As I mentioned, this is a fluid situation with new information coming out consistently. Although I mentioned this in the presentation, I think it is valuable to reiterate that the U.S. Treasury has announced that you have to certify that you took the PPP loan because it was a necessity.
If you applied for a PPP loan, you made a "necessity certification" that "[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant."
"Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business."
All PPP loan recipients will be retroactively considered to have certified that they took the factors above into consideration when they made this "necessity certification."
In addition, May 7, 2020, is the "Safe Harbor" deadline if you determine that it is in your best interest to return your PPP loan. Borrowers who return PPP loan funds no later than May 7 will be automatically deemed to have made the "necessity certification" in good faith, thus avoiding any consequences for certification due to a misunderstanding of certification requirements.
- If you received a PPP loan and feel you cannot make the updated "necessity certification" in good faith considering the newly released guidance, you may choose to repay your PPP loan no later than May 7 to avoid any negative consequences.
- If you received a PPP loan and feel you can make the updated "necessity certification" in good faith, then you do not need to take further action. However, it would be appropriate to document your analysis leading to this determination in order to protect yourself in the event of future audits.
We hope that you found the webinar informative. We are here to answer your questions.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at
Richard.Higgins@MCC-CPAs.com
. I can be reached at
Marty.McCarthy@MCC-CPAs.com
. As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Source: IRS: Companies Who Receive PPP Loans Will not Qualify for Tax Deductions. Marty Johnson. April 30, 2020. The Hill.
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
