PPP

Recently released IRS Notice 2021-20 (the “Notice”) provides guidance on the interaction between the Paycheck Protection Program (“PPP”) and the employee retention credit.  Unfortunately, the Notice may limit the ability of many PPP borrowers to claim an employee retention credit that employers may have believed they would be entitled to claim.
Continue Reading Notice 2021-20 Limits Employee Retention Credit For Many PPP Borrowers

As described in our previous post, on December 21, 2020, another round of COVID relief legislation was passed, providing an enhanced employee retention credit (“ERC”) with various new features and greater benefit amounts.  The legislation was subsequently enacted when President Trump signed the law on December 27.  On January 26, the IRS issued a news release, containing some informal guidance on how it will operationalize this enhanced program.
Continue Reading IRS Issues Guidance on Implementation of Expanded Employee Retention Credit

On November 16, the IRS added two new FAQs to its website that address an issue that has been concerning employers since the CARES Act was adopted.  For purposes of the employee retention credit (“ERC”), Section 2301(d) of the CARES Act includes an aggregation rule that treats all employers required to be aggregated under section 52 of the Code or certain provisions of section 414 of the Code to be treated as a single employer.  (See earlier coverage of the aggregation rule.)  Because the CARES Act also prohibits any employer who receives a Paycheck Protection Program (“PPP”) loan (regardless of whether the loan is forgiven) from claiming the ERC.

Based on the statutory language, practitioners have been concerned that if an employer acquires another employer that previously received a PPP loan, the acquirer’s entire aggregated group may no longer be eligible to claim the ERC.  More troubling, Section 2301(l)(3) of the CARES Act instructs the Treasury to promulgate regulations for the recapture of the ERC claimed by an employer that subsequently obtains a PPP loan.  This caused concerned that the acquirer could not only lose the ability to claim the ERC prospectively after the acquisition, but could be required to repay any amount or ERC previously claimed.  Although the new FAQs are not binding on the IRS, they prove welcome news.
Continue Reading IRS FAQs Provide Welcome Guidance on Employee Retention Credit and PPP Loans in M&A Transactions

On September 22, 2020, the IRS issued IRS Announcement 2020-12 to inform lenders that they should not file Forms 1099-C with the IRS or furnish copies of the Forms 1099-C to borrowers with respect to the  forgiveness of covered loans made under the Paycheck Protection Program (“PPP”).
Continue Reading IRS Tells Lenders not to File Forms 1099-C for Forgiven PPP Loans

On May 4, the IRS revised its newly released frequently asked questions (“FAQs”) to clarify the interaction of the Paycheck Protection Program (“PPP”) with the employee retention credit.  FAQ 79 now indicates that an employer that repays its PPP loan by May 7, 2020, in accordance with rules issued by the Small Business Administration (“SBA”),

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) authorizes the Treasury Department to provide payments to passenger air carriers, cargo air carriers, and certain contractors that must be exclusively used for the continuation of payment of employee wages, salaries, and benefits.  The Payroll Support to Air Carriers and Contractors Program provides a total of up to $32 billion in payroll support to avoid layoffs and furloughs in the airline industry, which has been hard hit by the COVID-19 pandemic. The CARES Act authorizes up to $25 billion in payroll support for passenger air carriers; other air carriers and certain contractors may receive up to $4 billion and $3 billion in payroll support, respectively.  Section 4117 of the CARES Act provides that the Treasury Department may receive warrants, options, preferred stock, debt securities, notes, or other financial instruments issued by a company receiving payroll support payments to provide appropriate compensation to the Federal Government for the provision of the financial assistance.  Treasury has released a form to memorialize the terms and conditions of the Payroll Support Program Agreement.
Continue Reading IRS Releases FAQs on Federal Tax Consequences of Payroll Support for Air Carriers and Contractors under CARES Act