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Treasury Releases Vital FAQ #46 for PPP Loans; Washington DOR Clarifies Taxability of Loan Forgiveness


On the penultimate day to determine if your business can faithfully certify the need for relief under the Paycheck Protection Program (PPP) loan program, the Treasury has stepped-up and made a sweeping rule that will ease the anxiety of virtually all PPP borrowers. Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification of the loan request in good faith.

The good news also extends to loans greater than $2 million. The FAQ clarifies that for any loan in excess of this safe harbor, if the SBA determines (in a later review) that the borrower lacked an adequate basis for the required certification for the loan’s necessity, the SBA will seek repayment of the loan proceeds and will not allow for loan forgiveness. This is a significant departure from the worrisome penalties and, frankly, threats that were prevalent in the news cycle and enforceable via FAQ #31 and FAQ #37. For details, see FAQ #46 here.

 Washington DOR Announcement:

In other (potential) good news, the Washington State Department of Revenue has issued a statement this week that businesses do not need to report loan proceeds under the PPP program as gross receipts for B&O tax at this time. The statement implies that state legislators could later take the opportunity to make proceeds (specifically loan proceeds forgiven) non-taxable, but no penalties or interest with regard to any such taxes will accrue until further notice and the legislature has had the chance to take action.

Berntson Porter is here to help you navigate these unprecedented times. Visit our online Resource Center for up-to-date information about COVID-19 legislation that impacts you and your business.   


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