Additional Guidance for Federal Relief Programs
Dear WANADA Members,
As we close out the seventh week of widespread social distancing in the Washington region, I wanted to make sure you were aware of a couple new guidances from the federal government regarding CARES Act relief options.
We wanted to also note that the
IRS issued guidance making clear that companies who receive PPP loans may not "double dip" by taking a tax deduction on expenses that were paid for with forgivable loan funds. The forgiven loan funds are exempt from income taxes, which is the genesis of the double-dipping concern that the IRS has addressed in this guidance.
The SBA also
issued guidance yesterday, capping a "single corporate group" from receiving more than $20 million in PPP funding. According to
NADA's interpretation of the rule, this decision is not retroactive, and only applies to disbursements made on April 30 or later. A "single corporate group" is defined as being "majority owned, directly or indirectly, by a common parent." Please refer to Question 27 in NADA's excellent
CARES Act Guidance for more details.
For companies who have not received PPP or
Economic Injury Disaster Loan advance funds, the Employee Retention Tax Credit is another available option. The IRS published an
FAQ page on the ERTC yesterday; the ERTC is available to businesses who a) did not receive EIDL advance or PPP funds and b) were shuttered either partially or entirely by a government mandate before March 31 or who suffered a "significant decline" in revenues in the first quarter of 2020.
The ERTC is available to businesses of nearly any size who meet the above requirements, and serves as a refundable tax credit that covers up to 50 percent of an employee's wages, up to $10,000 per employee. The IRS' robust guidance on the tax credit includes details on what counts as "wages," and thus would be subject to the $10,000 cap,
including certain "qualified health plan expenses."
Please let me or Joe Koch (
jk@wanada.org) know if you have any questions. We hope you have a safe and restful weekend; we will continue providing you with as much guidance and information as we can until this crisis abates, whenever that may be.
