In this week’s Wednesday episode (May 6, 2020) of the Town of Plymouth’s “COVID-19 Daily Update,” Heather Cozby gave an update on the status of debt forgiveness for the PPP loans, which were not intended to be considered taxable income. This week the IRS confirmed that while the loan forgiveness itself is not taxable income, any expenses that are typically deductible (such as payroll) will no longer be deductible. In essence, this is the same as saying the loan forgiveness is taxable income.

In response, the American Institute of CPAs (AICPA) has worked with Congress to put together a bill called the Small Business Expenses Protection Act of 2020. That bill has been approved by the Senate and is in the Senate Finance Committee. Heather encouraged any business that has received PPP funds to track and show their support for this bill, as the funds were intended to HELP small businesses retain employees, not BURDEN them with additional taxes by increasing their bottom line. If the IRS position stands and the bill does not pass, small businesses need to begin immediately planning for how they will handle the increased tax burden.

Additionally, loan recipients are supposed to have eight weeks to incur expenses in order for them to qualify for debt forgiveness. The problem for some small businesses is that they’re located in states where they’re still required to remain closed. They’re holding on to their loan proceeds in anticipation of returning to business. It remains to be seen whether they will now qualify for loan forgiveness. The AICPA is also working with Congress to change the wording of the PPP funding to protect businesses in this position.

The SBA has updated their FAQ page. Question #40 addresses employers trying to rehire employees after receiving PPP funds. In cases where employees refuse going back to work, the SBA has clarified that that will not count against the business owners. If you anticipate this to be an issue for you, there is a process you need to follow, including a good faith written offer to rehire and a documented employee refusal.

The CDC has issued guidelines for how businesses should operate during COVID-19 to mintain a healthy environment. If employees have additional concerns about returning to the workplace, those should be addressed to a business attorney.

Heather will be appearing on the show every Wednesday to give ongoing updates. Tune in next Wednesday at noon on the PAC-TV community channel and Plymouth government channel (Comcast 13 and 15, and Verizon 43 and 47), or online at PAC-TV’s streaming channel. You will have the opportunity to ask questions via email. The email address will be shown onscreen during the PAC-TV broadcast.