Tax Update Blog

Tax News & Views New PPP Guidance Roundup

June 5, 2020 | Blog

What You Need to Know About Newly Issued PPP Guidance – Adam Sweet, Eide Bailly. “On June 3, 2020, the Senate, via unanimous consent, passed legislation making material amendments to the Paycheck Protection Program (PPP). This legislation was previously passed by the House of Representatives and is expected to be signed into law by President Trump soon.”

Why Changes To PPP That Are About To Become Law Will Help Borrowers Obtain Loan Forgiveness – Megan Gorman, Forbes. “One of the key provisions in the new bill is that PPP borrowers will now have a longer time period to use the funds. In the original CARES Act, employers were limited to an 8-week period to use the funds. The new bill extends this period to 24 weeks.”

This change addresses one of the challenges in the PPP loan program. When the initial law was enacted, Congress was focused on providing various types of liquidity. One of the unintended consequences is that the increase in federal unemployment coverage of $600 per week was in conflict directly with the purpose of PPP loans. Some employees were making more on unemployment than when they were employed. As a result, this caused problems for employers seeking to rehire their employees with PPP money. 

Double-Dipping Concerns Halt PPP Deductibility Bill – Jad Chamseddine, Tax Notes($). “Senators concerned about double dipping blocked the fast-tracking of a measure that would allow businesses to deduct Paycheck Protection Program-associated expenses.”

 

CARES Act’s Delayed Provisions Could Go the Way of Cadillac Tax ­ - Jonathan Curry, Tax Notes ($). “The most recent bill out of Congress modifying and extending the Paycheck Protection Program (PPP) is likely to be the first of many legislative efforts to soften the requirements for coronavirus relief provisions.”

“Once those loans start coming due next year, Congress will be under a lot of pressure to extend due dates or expand the rules for forgiveness, and the same mind-set will likely apply to deferred payroll taxes that will be due in coming years. At that point, both programs would likely end up much like the Cadillac tax on high-cost healthcare plans or the medical device excise tax, which both were extended multiple times before finally being repealed, he said.

I find it hard to think that Congress will say to firms at the end of the year, ‘You have to pay this money now,’ even if it means they go out of business after all they did to keep firms in business during the downturn.”

-William G. Gale of the Bookings Institute

 

Extending The $600 Unemployment Benefit Would Hurt The Economy In 2021: CBO ReportSarah Hansen, Forbes. “New estimates from the Congressional Budget Office show that extending the extra $600 unemployment benefits until 2021 would boost consumer spending but stifle growth in other areas.”

Key Facts from the study:

  • “The CBO estimates that if the benefits are extended until January 31, 2021, then roughly 80% of people would take home more through unemployment than they would if they were employed.”
  • “Economic activity would be higher in the second half of the year but activity in 2021 would be lower if the benefit were to be extended.”
  • “Extra unemployment benefits will boost demand for consumer goods and services because people will have more cash on hand—that will boost output and employment.”
  • “The benefits would also put pressure on the economy in the other direction—the CBO says the benefits would reduce incentives to work for those who take home more from unemployment than they would otherwise earn, and that has the potential to depress both output and employment.”

 

More online tax settlement days set for LA, DC & Atlanta  - Kay Bell, Don’t Mess With Taxes. “An IRS effort last month to let folks with tax troubles negotiate settlements online was so successful, the agency is holding more such events this month, starting tomorrow, June 5 in Southern California.”

The IRS seems to be finally embracing the digital age. Other recent advancements include finally being able to e-file amended 1040’s. However, there is still room for improvement. This story recently highlighted the IRS has 10 million pieces of un-opened snail.

IRS Expands Virtual Settlement Day Program After Rollout Success - Frederic Lee, Tax Notes ($). 

Tax Court Trials in the Fall Will Look Very Different – Nathan J. Richman, Tax Notes ($). “There will be a fall trial calendar. However, there’s going to be travel limitations; the court will not be traveling for its fall trial calendar,” according to Tax Court Judge Ronald L. Buch. “What the court will be doing is it will be conducting remote calendar calls, and to the extent that trials are necessary, remote trials.”

The Courts will use Zoomgov for its trials.

IRS Interest Rates Decrease for the Third Quarter of 2020 – Russ Fox, CPA, Taxable Talk.

The IRS announced today that IRS interest rates will decrease for the third quarter of 2020 to 3% for most from 5%:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000;
  • three (3) percent for underpayments; and
  • five (5) percent for large corporate underpayments.

Stay informed!


This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.