April 29, 2020
Treasury secretary Steven Mnuchin said the administration would audit any company that received more than $2 million in a Paycheck Protection Program (PPP) loan.
As reported yesterday in the New York Times in an article entitled
“Treasury Vows to Recoup Virus Relief Aid Claimed by Big Companies”
by David McCabe, Mr. Mnuchin threatened to hold big companies liable if they did not meet the program’s revised criteria for accepting loans. The problem is that when many larger companies received the PPP loan, they did qualify. The criteria were not clearly outlined, leaving loopholes. The legal community claims that pursuing claims against those who were approved for funds based on the government’s own rules at the time will be difficult.
“I never expected in a million years that the Los Angeles Lakers, which I’m a big fan of the team, but I’m not a big fan of the fact that they took a $4.6 million loan,” Mr. Mnuchin said on CNBC. “I think that’s outrageous.”
Mr. Mnuchin said the program was not meant for companies with “substantial market value and access to capital markets.” These companies should be ready to demonstrate why they need the money. As of Tuesday afternoon, the Small Business Administration (SBA) had approved a total of nearly two million loans.
More than 100 companies have disclosed loans of more than $2 million, yet most have chosen to keep the money. So far, only 22 private and public companies have disclosed returning their funds, including the Los Angeles Lakers. Most of the companies returning money insist they qualified under the Treasury Department’s initial terms but opted to return the loans once it changed its guidance to avoid bad publicity.
Other companies have no intention of returning the money. Hotels, luxury resorts and management companies that funnel money back to Ashford Inc., an asset management firm based in Dallas, have received about $53 million in federal virus aid. Ashford said in a statement that it was keeping the money to “protect jobs, as the legislation intended.” Fiesta Restaurant Group, which has received $15 million, said in a regulatory filing that it was reviewing the new guidance.
I am presenting a webinar on PPP loan forgiveness this Friday, May 1 at either 11:00 AM or 1:00 PM.
Click here
to register for the morning program or
click here
to register for the afternoon program.
We will share more details as they become available. Please visit our
COVID-19 Resource Page
for more updates.
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: “Treasury Vows to Recoup Virus Relief Aid Claimed by Big Companies.” David McCabe. The New York Times. April 28, 2020.
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).
