Did you receive PPP monies?

Have you or do you plan to file for debt forgiveness?  We are here to help!  We hoped Congress would remove loan forgiveness application requirement for small loans (less than $50,000.)    As of today, this has not happened.  So, we recommend that you go ahead and apply for forgiveness.  We will need authorization to process for you.  We are available until December 31, 2020 to apply for these and then again after April 15, 2021.

Debt forgiveness creates taxable income in the year forgiven normally.  The current law is allowing the taxpayer to claim as income in the year received or the year forgiven.  The year to claim as income is determined by the taxpayer.  We can help you make an informed decision based on the current information.

Let us know if you need help!

IRS Continues to Work Through Mail Backlog

IRS Continues to Work Through Mail Backlog Consisting of Over 5 Million Unopened Items

The IRS continues to work through its mail backlog, which consists of over 5 million unopened items, according to IRS Commissioner Charles “Chuck” Rettig. Notably, there are an estimated 2.5 million unopened paper income tax returns included within the backlog.

“We are doing everything we can to reduce this backlog, including providing relief for taxpayers who have sent us mail that was unopened for a period of time,” Rettig said during an October 7 House Oversight and Reform Subcommittee on Government Operations hearing. Additionally, the IRS continues to receive approximately 300,000 to 500,000 pieces of mail each week, Rettig noted.

According to Rettig’s written testimony provided to the National Society of Accountants (NSA) by the IRS, some of the following initiatives are taking place:

  • For people who had tax refunds affected by IRS closures, it is paying interest on refunds. These payments, which can sometimes show up as a second deposit, average $18 for nearly 14 million taxpayers.
  • The IRS is also crediting people in instances where there is unopened mail and they are making a payment. The IRS credits people on the date the mail was received, not the day the IRS processes the payment.

For NSA’s full report, click here.

PPP Loan Forgiveness

To All Valued Clients

Some of you have been receiving requests from your banks to complete the PPP loan forgiveness applications. As of 9/30/20 the SBA has not approved any of the 100,000 forgiveness applications already received by the SBA (out of the approximately 5,000,000 original loans funded).

The actual date the forgiveness application is due is 10 months after the end of your expense covered period. For example, if you received your loan 4/7/20, and you elected the 24-week expense covered period, the usage period ends 9/21/20, which results in a forgiveness application due date of 7/21/21.
There is pending legislation in Washington DC to have automatic forgiveness for loans under $50,000. This would mean little or no work from you and/or us to have your PPP loans forgiven.

Some of you have decided to go ahead and start the loan forgiveness process now. If you will need our assistance in this process please contact us by December 15th, so that we have the time needed to get completed before our busy season hits.

PPP loans that are forgiven are considered “taxable” by the IRS as of now. There has been some movement in Washington DC to change the tax status to “exempt”. We will let you know when we receive more information.

There are some specific information/decisions needed to process the loan forgiveness application:

Covered period?
Which expenses to use?
Documentation to include?
When to apply?
Tax planning?

Please contact our office if you need assistance or have questions with the process. We want to make sure the loan is forgiven to the extent able.

Thank you!

Teresa Harrington
Harrington & Associates PA