Tax Monitor

Additional Guidance on Paycheck Protection Program Loans

April 7, 2020

By: Chad J. Sullivan

The Treasury Department has just issued additional guidance on the Paycheck Protection Program (PPP) loans.  The entire FAQs are available here. The inclusion of benefits in the $100,000 compensation cap has been the source of many questions. The Q&A on this issue appears below for ease of reference.

Question: The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?

Answer: No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:

• employer contributions to defined-benefit or defined-contribution retirement plans;
• payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
• payment of state and local taxes assessed on compensation of employees.

If you have any questions please contact an attorney in the Tax Practice Group.