Call Toll Free +1 855-856-TIPS
companies have been denied forgiveness from the Paycheck Protection Program loan. However, are permitted to take tax credit corresponding to the number of proceeds utilized to pay employee wages.
Denied PPP Forgiveness?
In an IRS statement released last week, companies have been denied forgiveness from the Paycheck Protection Program loan. However, are permitted to take tax credit corresponding to the number of proceeds utilized to pay employee wages. Employee retention credit applies only to wages which were paid in 2020’s second and third calendar quarters. Credit may also be granted in respect to companies’ 4th quarter return.
This newly implemented policy serves as a change from Congress’ stimulus bill established in December. Beforehand, companies were not authorized to take credit if they already got hold of a PPP loan. As of now, businesses are eligible to receive credit regardless of them being a loan recipient or not, suggesting that the loan does not entitle forgiveness.
Loan recipients are approved to apply for forgiveness if at least 60% of wage proceeds and funds are applied to rent or mortgage, utilities, and additional costs related to operation and function.
Since the window to submit 4th quarter returns is small, the IRS advises companies to either go through the regular process of filing for an adjusted return of claim for a refund for the designated quarter with Form 941-X.
Health costs which are considered wages are also qualified for credit.