A New Round of PPP Loans and Major Tax Changes in the Stimulus Bill – Start Planning Now
PPP forgiveness is now tax-free and expenses covered with forgiveness are 100% deductible. The stimulus bill, the text of which was released earlier this month, was signed into law on Sunday night and contains other major provisions. Planning for these changes is crucial – contact CPAs and advisors now.
The $900-billion spending package includes $600 stimulus checks for some Americans and a $300-per-week federal unemployment insurance top-up. However, business owners will find the second round of PPP and tax changes to be the most significant part of the stimulus bill. We have put together a summary of the most significant parts of the bill to businesses: Changes that apply to all PPP loans, PPP Round 2, and the major tax provisions. We encourage clients to contact us now to set up tax and business planning meetings in the coming days. This report is not an exhaustive list and should not be taken as legal advice –monitor email updates from Ryan & Wetmore, and meet with tax planning experts.
- Businesses must calculate their gross receipts for each quarter of 2019 and 2020 and determine their revenue declines from a year earlier. This could affect your eligibility for PPP and the Employee Retention Credit (ERC).
Changes that apply to all PPP loans (in both rounds)
The stimulus package not only contains funding for new PPP loans; it also includes changes that affect PPP loans that had already been issued in round 1. Most changes (except for the tax treatment changes) do not apply to loans forgiven before the bill became law on December 27, 2020.