Tax Monitor

Internal Revenue Service Updates Cafeteria Plan And Health Flexible Spending Arrangement Rules In The Face Of COVID-19

May 13, 2020

With the issuance of Notice 2020-29 and Notice 2020-33, the Internal Revenue Service (“IRS”) increased the carryover amount allowed for health flexible spending arrangements and expanded election rules for cafeteria plans. Employers wanting to offer these new options and provide additional flexibility to their employees must amend their plans.

CARRYOVER AMOUNT INCREASED FOR HEALTH FLEXIBLE…

Economic Necessity Safe Harbor

May 13, 2020

The SBA provided a great deal of relief to PPP loan borrowers today concerning the economic necessity certification. In a new FAQ 46, the SBA provided a safe harbor concerning the economic necessity certification which required borrowers to certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

The SBA has…

PPP Safe Harbor Extended For All Applications But Still No Guidance On “Necessity” Certification.

May 11, 2020

On May 8, 2020, the Treasury Department issued its Ninth Interim Final Rule (Ninth IFR) related to the Paycheck Protection Program. The Ninth IFR revises the language in Part III. 5. of the Fourth Interim Final Rule¹ issued April 25, 2020 providing a “Limited Safe Harbor with Respect to Certification Concerning Need for PPP Loan Request.”

Significantly, this revision to the Fourth Interim Final…

Certifier Beware: Certifications & Liability Under the False Claims Act

May 8, 2020

Mark Twain once observed that while history does not repeat itself, “it rhymes.” The federal government’s response to COVID-19 is likely to follow a familiar pattern: (a) the federal government will continue to provide massive amounts of financial aid in an effort to stave off the worst economic effects of the crisis; (b) some of those funds will be allocated to entities that the public perceives…

Safe Harbor Extended; Questions Still Unanswered

May 6, 2020

On May 5th, the Department of the Treasury updated the Paycheck Protection Program Frequently Asked Questions to add questions 43 and 44.

In answer to question 43, the Treasury extends the “safe harbor” for repayment of PPP loans from May 7, 2020 to May 14, 2020. The “safe harbor” provides that the SBA will deem a borrower to have made in good faith the certification “current economic uncertainty…

Eighth SBA Interim Final Rule Addresses PPP Eligibility Questions on Non-discrimination and Student Workers

May 6, 2020

On May 5, 2020, the Treasury Department issued its eighth interim final rule (IFR) related to the Paycheck Protection Program, “Business Loan Program Temporary Changes; Paycheck Protection Program-Nondiscrimination and Additional Eligibility Criteria.” The IFR answers two questions related to eligibility; non-discrimination and student workers.

Non-discrimination

Recipients of PPP loans are…

SBA Update To FAQs Begins To Address Forgiveness Questions

May 4, 2020

The Treasury issued an update to the Paycheck Protection Program Frequently Asked Questions on Sunday, May 3, 2020. The update added Question 40: “Will a borrower’s PPP loan forgiveness amount …be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?”  The answer is no.

Treasury promised that a forthcoming interim final rule will…

One Big Question Answered – Unfortunately with a No.

May 1, 2020

The IRS released Notice 2020-32 addressing expenses paid with PPP loan proceeds which are subsequently forgiven. The CARES Act exempts the forgiveness of the PPP loan proceeds from federal taxable income. There had been some question as to whether the expenses paid which gave rise to the forgiveness would be allowable as deductions for federal income tax purposes. The question arose from IRC…

Updated Paycheck Protection Program (PPP) Loans Frequently Asked Questions

April 30, 2020

The U.S. Department of Treasury updated its Paycheck Protection Program Loans Frequently Asked Questions (FAQs) to add questions 38 and 39.

Question 38 addresses eligibility. It provides an interpretation of the “in operation on February 15, 2020” requirement for eligibility for participation in the PPP. Under certain circumstances, the acquirer of a business or substantially all of the assets of…

SBA Interim Rule on Corporate Group Limits and Qualification of Non-Bank Lenders

April 30, 2020

The Treasury Department today issued interim final rule (IFR) “Business Loan Program Temporary Changes; Paycheck Protection Program-Requirements-Corporate Groups and Non-Bank and Non-Insured Depository Institution Lenders.”

The IFR limits the total amount of loans available to a group of businesses majority owned, directly or indirectly, by a common parent to $20,000,000.

The IFR also defines the…

Additional PPP Disbursement Guidance

April 29, 2020

Last night the United States Department of the Treasury issued a new Interim Final Rule “Business Loan Program Temporary Changes; Paycheck Protection Program-Requirements-Disbursements.”

The rule provides:

• that borrowers may not structure their draws on a PPP loan to delay the start of the eight-week covered period, and
• a reporting process for banks to collect their loan processing fees.

A link to…

New Guidance On Calculating PPP Loans

April 27, 2020

The Treasury Department issued a new guidance for borrowers on Friday, “Paycheck Protection Program How to Calculate Maximum Loan Amounts-by Business Type.”  Notable in each example the guidance notes that “PPP loan forgiveness amounts will depend, in part, on the total amount spent during the eight-week period following the first disbursement of the PPP loan.)

The new guidance can be downloaded …