Not only is this a busy time of the year with the holidays, but it is also busy with staying on top of updates regarding PPP loans and HHS Provider Relief Funds. Many of you have questions about the tax implications of the PPP loan, when to file for PPP loan forgiveness, and the next steps to take with the HHS Provider Relief Fund. This blog will address your questions.
PPP Loan Updates
- Unfortunately, Congress has not made any changes regarding the taxability of PPP expenses. Therefore, your PPP expenses are not deductible, and there are tax consequences associated with your PPP loan. We are still hopeful that Congress will pass a bill to change this, but as of right now, our recommendation is to assume that PPP expenses will be taxable.
- Recent guidance has come out clarifying that your 2020 tax return is not impacted by the year in which you receive loan forgiveness. Even if your loan is forgiven in 2021, the inability to deduct PPP expenses will still impact your 2020 tax return.
- If you have asked us to help you with your loan forgiveness application, we have started the process and hope to get through these requests by the end of January. If you have not asked for our assistance but would like help, please reach out to us ASAP. We will be completing requests for help in the order we receive them.
- We had previously recommended that if you had a PPP loan over $150,000 or under $50,000 and were completing your own loan forgiveness application to go ahead and submit, assuming your bank was accepting applications. We were hopeful that Congress would simplify the loan forgiveness process for PPP loans between $50,000 to $150,000. However, since Congress has not simplified the process, we recommend that you now submit your application for loans between $50,000 to $150,000.
- Fortunately, you have plenty of time to submit your loan forgiveness application. You have up to 10 months from the end of your covered period to submit.
- Remember, if you received an EIDL grant, this amount will have to be repaid after your PPP loan is forgiven. Your bank will provide guidance on how to repay the grant.
HHS Provider Relief Fund Updates
- You may soon receive an email notification that you have been approved for additional HHS Phase 3 funding. We are not sure how the additional funds are calculated, but it will be in addition to the baseline HHS payment you may have already received this summer. The money will be automatically deposited into your bank account within a few days of receiving the email from HHS.
- If you have not already signed an attestation statement, you will be asked to sign one before the funds are deposited into your account. Please review our previous blog from October 23 for the requirements for receiving these funds.
- Additional guidance has been released expanding the use of HHS funds. Please click on the link below for more information:
- The HHS funds you receive will be taxable to you. Since these additional checks are coming so late in the year after we have already provided most of you with year-end tax planning, please reserve 40% of the HHS funds for additional taxes that will be owed in April.
- There will be reporting requirements for the HHS funds that have not yet been released. The requirements are scheduled to come out in January, and we will provide additional guidance at that time.
We know this has been an unprecedented year for everyone. Staying on top of the latest developments has never been more important, and Fluence will continue to provide the guidance you need. We greatly appreciate all the positive feedback we have received from you. It is our pleasure to help. We wish everyone a safe and happy holiday season!