Special Update: The Internal Revenue Service won’t charge people who received an economic stimulus payment on a prepaid debit card in the mail and threw it away because they thought the envelope was junk mail.
In PPP news:
On Friday, June 5, 2020, the President signed the PPP Flexibility Act into law, which included some BIG changes to the requirements for usage and forgiveness of Paycheck Protection Program funds. Changes are retroactive and so apply to all loans EXCEPT where noted below. Below are highlights of the changes made:
- Use of funds timeline is extended from 8 weeks to 24 weeks. However, compensation for owner-employees or self-employed taxpayers can not exceed 2.5 months’ worth of 2019 compensation. Businesses can elect to still use the 8 week timeline.
- Only 60% must be used on payroll (changed from 75%) and 40% can now be used on qualified expenses (changed from 25%).
- You now have until December 31st to bring back any employees that were laid off or furloughed.
- If any portion defaults into a loan the payback term is extended from 2 years to 5 years – this only applies to loans issued on or after June 5th.
- The deferral period on any unforgiven amounts has increased from 6 months to 10 months.
- The PPP can now be used to buy PPE and retro fit or modify your location to accommodate social distancing and safety measures.
- Businesses can now combine the PPP with the payroll tax deferral (applies to employer portion of Social Security only) that was part of the CARES Act.
We would also like to remind you that the expenses that you use for your forgiveness calculation can not be used to reduce your income (barring any IRS guidance and/or legislation to the contrary).
If you are self-employed or small business owner and are struggling and have not received PPP funds, there is still funding available BUT the deadline to apply is August, 8th 2020. PLEASE NOTE: Some lenders may have earlier internal deadlines. Please contact your lender directly.