On Tuesday, the SBA and Treasury issued two FAQs related to the PPP and three FAQs related to the PPP and Economic Injury Disaster Loans (EIDL) interaction. An interim final rule also was issued to establish procedures for borrowers who want to appeal certain SBA or lender decisions regarding loan forgiveness.
PPP FAQs No. 50 and 51 were added to a list of FAQs first published in April. The new FAQs:
- Permit payments for vision and dental benefits to be included in the group health care benefits and insurance premiums that are eligible to be paid with PPP funds. This has been a common question in our Town Halls so we’re glad to see this additional clarity provided for borrowers.
- Establish that the payment or nonpayment of fees of an agent or other third party is not material to the SBA’s guarantee of a PPP loan or to the SBA’s payment of fees to lenders.
The three FAQs related to the PPP and EIDL were added to a list of PPP forgiveness FAQs that was first published August 4. Here’s an overview of those FAQs:
- Lenders can confirm the amount of a borrower’s EIDL advance (if applicable) through the SBA’s PPP Forgiveness Platform. The advance will be automatically deducted by the SBA from a PPP borrower’s loan forgiveness amount when the borrower has received both EIDL advance and PPP funds.
- Instructions are provided to lenders on how to handle any remaining balance due on a PPP loan after the SBA remits the forgiveness amount to the lender. Lenders must notify the borrower of the amount remitted by the SBA and when the first payment will be due. The loan must be repaid by the borrower before the maturity date. PPP loans originating before June 5, 2020, have a two-year term, unless the lender and borrower mutually agree to extend the maturity of such loans to five years. If the loan originated on or after June 5, 2020, the term is five years.
- If a borrower received an EIDL advance in excess of the amount of its PPP loan, the lender must notify the borrower when the first payment will be due, and the loan must be repaid by the borrower before the maturity date, either two or five years.
The new interim final rule establishes procedures for a borrower to request a review of a lender decision or an SBA decision on loan forgiveness. Final SBA decisions can be appealed to the Office of Hearings and Appeals (OHA). Borrowers may also request that the SBA review a lender decision outside of the OHA.
Employee Payroll Tax Deferral
On August 8, 2020, President Trump issued a memorandum to the Secretary of the Treasury authorizing the deferral of the employee portion of certain payroll tax obligations beginning September 1. The deferral applies to any employee whose pretax wages or compensation during any biweekly pay period generally is less than $4,000. Treasury is directed to issue guidance to implement the order and to explore ways to ultimately eliminate the obligation to pay the deferred taxes.
We have received a lot of questions about the details of the order, including whether the deferral is voluntary for employers and employees and how to implement the deferral. The AICPA’s Tax Executive Committee has asked Treasury and the IRS to issue guidance relating to several open questions surrounding the executive order. The request for guidance is available here.
This issue is fast-developing and employers have many questions. At this point a lot of questions haven’t been resolved. In our conversations this week with payroll providers, they are examining the executive order, identifying their implementation questions and beginning to assess the programming that will be needed in their systems.