Taxpayers want readability on ERC and PPP mortgage coordination

Following the latest enactment of the Consolidated Appropriations Act, 2021 (CAA 2021), PL 116-260, taxpayers who’ve obtained installment loans beneath the Paycheck Safety Program (PPP) may also apply for the payroll retention credit score. workers (ERC), however want steerage on how the layouts work together. AICPA despatched on Friday a letter to the Treasury and IRS recommending that such tips state that submitting a request for a PPP mortgage forgiveness isn’t an election by the taxpayer to forgo ERC for wages declared on the request that exceed the quantity wages required for mortgage forgiveness.

The CARES legislation (help, aid and financial safety) in opposition to the coronavirus, PL 116-136, promulgated in March 2020, gave taxpayers two provisions to assist them throughout financial disruptions linked to the pandemic: the PPP and the ERC. Nonetheless, beneath the CARES Act, if an employer acquired a mortgage coated beneath the PPP, the employer was not eligible to say the CRE.

CAA 2021 amended the CARES legislation to permit employers who’ve acquired a PPP mortgage to retroactively declare the CRE for salaries paid after March 12, 2020, however not for salaries used to acquire the cancellation of the PPP mortgage. Nonetheless, it’s not clear how reporting salaries as labor prices on a beforehand filed PPP mortgage forgiveness request impacts an employer’s capacity to say CRE for salaries that have been included in a mortgage forgiveness request. , however didn’t have an effect on the quantity of the mortgage forgiveness.

In its letter, the AICPA recommends that the IRS and the Treasury problem tips that the submitting of a request for a PPP mortgage forgiveness doesn’t represent an election to forgo the ERC with respect to the quantity of wages. declared on the appliance exceeding the quantity of wages required for mortgage remission.

Alistair M. Nevius, JD, ([email protected]) is the JofAeditor-in-chief of taxation.

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