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  • Amie Kuntz

Tax Week In A Nutshell 6.19.20

PPP 2.0


It’s rare, but not impossible, that a sequel is as good as or better than the original. Let’s see…Back to the Future Part II & III, The Godfather Part II, maybe one of the Lethal Weapons, Indiana Jones and the Last Crusade, and all of Star Wars could arguably hold their own in comparison to the first films.


Those sequels took effort to maintain the integrity for the series, but honestly, the bar has been set pretty low in round 1 for PPP! Give it credit where it’s due though, despite a rocky start/middle/ending, the program actually helped many businesses and was created and implemented in record time. PPP 2.0 should have much smoother sailing with the SBA having seen the downfalls of countless final-finalfinal-final3 IFRs and logistics for a successful launch. Let us hope.


PPP 2.0 is likely to be more targeted than its predecessor but will allow qualifying small businesses to receive a second PPP loan to stay afloat during the sharp economic downturn. Bills recently introduced in the Senate and House include the following criteria for supplemental PPP loans:


· Borrowers must be self-employed or have 100 or fewer employees

· Have suffered more than a 50% loss in revenues compared to a previous quarter

· Exhausted first PPP loan funds


Underserved and rural borrowers are meant to have priority in this round of supplemental PPP, as (spoiler alert) they were supposed to have had in round one. Stay in your seats to see if PPP 2.0 makes the cut or if PPP - The Original will stand alone as a potential box office flop for businesses continuing to struggle.


MSL – DOA?


I recall writing about the introduction of the Main Street Lending (MSL) program months ago and haven’t heard much about it since…what happened? While the SBA leads the charge on the PPP, the Federal Reserve is heading up MSL and apparently it’s just now becoming available for small to mid-sized businesses.


On top of its slow start, banks are reportedly not jumping at the chance to offer MSL which could potentially hurt businesses in need of support. The MSL is a true loan, whereas the PPP is designed to be more akin to a grant, which adds to uncertainty for the program’s potential. Businesses may not want to be saddled with debt they may not be able to repay. But many businesses need multifaceted help right now, so hopefully those who need it will find the MSL more helpful than burdensome.


PPP Made EZ


In response to the Paycheck Protection Program Flexibility Act (PPPFA) and subsequent Interim Final Rules (IFRs), the SBA revised the “original” PPP loan forgiveness application and also created a short form for qualified borrowers. PPP Loan Forgiveness Application Form 3508EZ is available for PPP borrowers who meet at least one of the following requirements:


· Self-employed with no employees

· No employee salary reduction by more than 25% and no employee hour reduction

· No employee salary reduction by more than 25% and experienced a reduction in business activity due to compliance with health guidelines related to COVID-19


Form 3508EZ instructions found here.


Those not qualifying for the EZ may use the recently revised long form for PPP forgiveness found here with instructions here.


The latest IFR (that's 19 of them so far if you're counting with me) provides PPP forgiveness guidance on calculating owner compensation and makes it E-Zier to obtain full forgiveness.


Further guidance still is said to be forthcoming on clarifying who is an owner-employee, what's included in utilities, and what documentation self-employed individuals need to provide for forgiveness. As far as the making the related expenses deductible, don't hold your breath. There is bipartisan support both for and against the idea.


PPP loan funds are still available through June 30th, so if you have not yet applied and are in need please do so!


EIPs Are For Recipients, Not Nursing Homes


This, I thought, would go without saying but it would seem needed clarification for some care facilities receiving the payments as representative payees. The IRS reminded that Economic Impact Payments (EIPs) are intended for recipients even if the facility receives the payment directly or indirectly.


EIPs do not count as income needing to be turned over by recipients whose care is provided for by Medicaid. The IRS also noted, "These payments do not count as a resource for purposes of determining eligibility for Medicaid and other federal programs for a period of 12 months from receipt. They also do not count as income in determining eligibility for these programs."


The Social Security Administration expanded on the matter in its previously updated FAQ, "The EIP belongs to the Social Security or SSI beneficiary. It is not a Social Security or SSI benefit. A representative payee should discuss the EIP with the beneficiary. If the beneficiary wants to use the EIP independently, the representative payee should provide the EIP to the beneficiary. If the beneficiary asks the representative payee for assistance in using the EIP in a specific manner or saving it, the representative payee can provide that assistance outside the role of a representative payee."

Curious about Juneteenth? It's also called Emancipation Day or Juneteenth Indpendence Day and commemorates the end of slavery in the United States. The importance of the privileged making efforts to understand the struggles of others cannot be overstated. We can continue to do better!


Amie K


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