The Biden Administration’s American Families Plan and other tax proposals may significantly reshape the tax landscape for high-income earners, particularly those making over $400,000 annually.

Key Tax Proposals from the American Families Plan

• Increase the top marginal income tax rate to 39.6% for households earning over $400,000

• Tax long-term capital gains at 39.6% for households earning over $1 million

• Eliminate step-up in basis for gains above $1 million at death (unless donated to charity)

• Tax carried interest as ordinary income

• Permanently extend excess business loss limitation rules

• Apply the 3.8% net investment income tax uniformly to those earning over $400,000

IRS Enforcement Expansion

To reinforce compliance, President Biden also proposes $80 billion in funding for IRS audits, targeting high-income taxpayers and those suspected of tax avoidance. This effort would be paired with expanded IRS enforcement authority.

Additional Campaign Proposals Still on the Table

Although not part of the American Families Plan, these proposals remain under consideration:

• Phase out the 20% QBI deduction

• Limit itemized deductions to a 28% benefit and reinstate the Pease limitation

• Reduce the estate tax exemption from $11.7 million to $3.5 million and raise the estate/gift tax rate to 45%

• Impose the 12.4% Social Security tax on wages over $400,000

What Should Taxpayers Do Now?

1. Review Your Current Tax Profile

High-net-worth individuals, business owners, and family offices should assess:

• Current income and deductions

• Estate structure and multi-generational planning needs

• Business interests and succession goals

2. Plan with Flexibility

Due to the uncertainty around the final scope or timing of new legislation:

• Use “what-if” modeling and scenario planning

• Consider the impact of retroactive provisions (e.g., capital gains tax changes effective April 28, 2021)

3. Capital Gains Strategy

• Accelerate gains before rate increases

• Coordinate capital gains with other income to avoid higher thresholds

• Use or opt out of installment sales based on timing

• Consider deferral tools: like-kind exchanges, opportunity zones, and ESOP rollovers

4. Revisit Your Estate Plan

• Consider gifting now before exemption limits change

• Explore trust strategies for multi-generational planning

• Prepare to act quickly if legislative changes gain momentum

How We Can Help

We offer full-service planning for wealthy individuals and families, including:

• Tax consulting and compliance for estate, income, gift, and trusts

• Charitable giving and foundation strategies

• Executive compensation and retirement planning

• Cross-border tax analysis and compliance

• IRS audit support and representation

Our experienced professionals can help you:

• Monitor and interpret legislative developments

• Model tax scenarios

• Implement preemptive strategies to minimize liabilities

Let us guide you through the complexities of today’s tax environment—with clarity, foresight, and customized planning tailored to your financial goals.
Contact us to schedule a confidential consultation.

On April 28, 2021, President Biden introduced the American Families Plan during a joint session of Congress. The proposal outlines substantial tax increases on high-income households, while expanding benefits and tax breaks for low- and middle-income families.

The $1.8 trillion plan includes:

• $1 trillion in investments

• $800 billion in tax cuts

Key Investments in the Plan

• Free universal preschool

• Two years of free community college

• Programs to address teacher shortages

• Expanded childcare assistance

• School-based nutrition programs

• A national paid family and medical leave program

Proposed Tax Breaks for Low- and Middle-Income Families

• Extend the expanded Child Tax Credit (from the American Rescue Plan Act) through 2025 and make it permanently refundable

• Permanently extend the Child and Dependent Care Credit and make it refundable

• Permanently extend the Earned Income Tax Credit (EITC) for childless workers

• Extend the Affordable Care Act (ACA) premium tax credits introduced in the American Rescue Plan

Proposed Tax Increases to Fund the Plan

• Increase the top individual income tax rate to 39.6% for households earning over $400,000

• Raise the long-term capital gains and qualified dividends tax rate to 39.6% for those earning over $1 million

• Reduce the step-up in basis at death for gains over $1 million (or $2.5 million per couple, with real estate exemptions), taxing gains on inherited assets not donated to charity

• Eliminate carried interest treatment, taxing it as ordinary income

• Limit like-kind exchanges on real estate to $500,000 in gain deferral

• Make the excess business loss limitation permanent

• Apply the 3.8% Net Investment Income Tax (NIIT) consistently to individuals earning over $400,000

• Increase IRS enforcement and audits focused on higher-income taxpayers

The administration estimates these tax changes could raise approximately $1.5 trillion over 10 years.

What’s Missing?

Notably absent from the plan:

• Estate tax exemption reduction

• Estate tax rate increase to 45%

Although these were part of Biden’s campaign platform, they may still be introduced in future legislation. While the estate tax represents a small portion of federal revenue, its potential reduction remains a priority for many Democratic lawmakers.

Outlook and Planning Considerations

While ambitious, the American Families Plan is unlikely to be enacted exactly as proposed. Retroactive application is also unlikely. However, some level of tax increase is probable.

What Taxpayers Should Do Now:

• Review current estate plans

• Discuss wealth transfer strategies

• Consider timing of income and deductions

• Evaluate options for capital gains realization and deferral

• Stay informed on legislative developments

How We Can Help

Our Private Client Services team offers comprehensive planning for individuals and families, including:

• Tax and estate planning

• Charitable giving strategies

• Retirement and compensation planning

• Cross-border consulting

• IRS audit assistance

We’ll help you stay informed, model “what-if” scenarios, and prepare a proactive plan tailored to your goals.

Contact your Private Client Services advisor today to review your options and prepare for what’s ahead.

The Biden administration’s first 100 days were largely focused on addressing the COVID-19 crisis—accelerating vaccine distribution and stabilizing public health. With that initial phase now behind him, President Biden has begun advancing broader policy priorities that span the economy, environment, technology, healthcare, and taxation.

Priority: Putting the Pandemic Behind Us

The American Rescue Plan Act (ARPA), passed in March 2021, provided $1.9 trillion in stimulus focused on:

• Direct stimulus checks

• Expanded unemployment and paid leave

• Emergency small business relief

• Support for state/local governments

• Vaccine distribution and testing

What to Watch:
While the pandemic will eventually recede, its economic and societal impacts will linger. Forward-looking businesses are adapting to post-pandemic realities—rethinking how they manage employees, serve customers, and ensure resilience amid future disruptions.

Priority: Doing Well by Doing Good

The administration has embraced Environmental, Social, and Governance (ESG) priorities, starting with climate action:

• Rejoining the Paris Agreement

• Proposing a $2T Clean Energy Revolution

• Eliminating fossil fuel emissions from power by 2035

• Promoting EV infrastructure, zero-emission transit, and eco-building standards

• Calling for a 50–52% emissions reduction by 2030 (vs. 2005 levels)

Regulatory Focus:
The SEC’s Climate & ESG Task Force is enhancing disclosure requirements for environmental, diversity, and governance practices.

What to Watch:
Public and investor expectations around ESG are growing. Forward-thinking companies are embedding sustainability, equity, and purpose into core operations—and those that do so effectively may see higher profitability and lower risk.

Priority: Innovation in the Spotlight

The pandemic underscored America’s reliance on technology. The Biden administration acknowledges this while signaling increased oversight of Big Tech—particularly around:

• Antitrust enforcement

• Cybersecurity protections

• Data privacy regulation

What to Watch:
CFOs are doubling down on digital transformation, but balancing tech investment with regulatory compliance will be critical.
📊 BDO Survey Highlights:

• 55% plan to increase R&D spending

• 39% accelerated digital investments due to the pandemic

Priority: Defining “Bidencare”

While sweeping healthcare reform is unlikely, the Biden administration is working to strengthen the Affordable Care Act (ACA):

• Expanding enrollment and subsidies

• Capping healthcare premiums at 8.5% of income

• Exploring a public option

What to Watch:
Employers should expect rising interest in expanded care access (especially mental health and telehealth) as employee well-being becomes a business imperative.

Priority: Building Back Better

The American Jobs Plan outlines the administration’s infrastructure vision, including:

• Roads, bridges, airports, transit

• Electric vehicle (EV) charging networks

• Broadband expansion and clean water

• Modernizing schools and housing

• Investments in R&D and workforce training

What to Watch:
Infrastructure spending could provide a major boost to productivity and supply chain stability. Projects with environmental and equity components will likely take priority.

Priority: Tax Increases on the Table

To fund investments, the Biden administration has proposed several tax changes:

• Raising the corporate tax rate from 21% to 28%

• Increasing individual tax rates on those earning over $400,000

• Enhancing GILTI and other international tax rules

• Reinstating elements of the corporate AMT

• Introducing surcharges and limiting deductions

What to Watch:
Per BDO’s 2021 Tax Outlook Survey:

• 92% of tax execs expect a corporate rate hike

• Priorities include income tax, international tax, and payroll adjustments

The midterms may dictate the legislative window for major tax reform. Until then, targeted changes are possible via reconciliation.

Priority: Regulating Wall Street

Appointing Gary Gensler (SEC) and Rohit Chopra (CFPB), the administration signaled a stricter approach to financial regulation. Expect:

• Increased enforcement

• Enhanced consumer protections

• Closer scrutiny of disclosure and compliance standards

What to Watch:
Robust compliance and data governance will become key differentiators for businesses, not just regulatory requirements.

Final Thoughts: The Role of Business in a Divided Climate

With midterm elections approaching and a polarized Congress, President Biden may face challenges pushing through all elements of his agenda. Businesses should prepare for rapid shifts, especially in ESG, innovation, infrastructure, and taxation.

Takeaway:
In moments of political gridlock, corporate leadership will play a pivotal role in driving progress. Businesses that align operations with policy shifts—and lead with purpose—can shape a more resilient and equitable economy.

As you may know, the IRS extended the 2020 income tax filing deadline to May 17, 2021. However, this extension does not apply to all tax forms. One notable exception is Form 709, the Federal Gift Tax Return, which must still follow its original due date guidelines.

When Is Form 709 Required?

You must file Form 709 if, in 2020, you:

• Gave more than $15,000 to any one individual (including gifts in trust)

• Made gifts under $15,000 to certain types of trusts

• Gave hard-to-value assets, such as:

  • Artwork

  • Closely held business interests

These are personal gifts—not charitable contributions, which are reported on your Form 1040.

Examples of recipients include:

• Family (e.g., children, nieces, nephews)

• Friends

• Business associates

Important Filing Note for 2020

Although the deadline for filing Form 1040 was extended, the deadline to extend Form 709 remained April 15, 2021.

To extend your time to file Form 709, you must have filed either:

• Form 4868 – Application for Extension of Time to File Your Individual Income Tax Return

• Form 8892 – Application for Extension of Time To File Form 709

If neither form was filed by April 15, you may be considered late, even if you plan to file your Form 1040 by the extended May 17 deadline.

What You Should Do Now

If you believe you may have a gift tax filing requirement, it is critical to act immediately. Late filing can result in penalties and interest, and missing an extension deadline further complicates compliance.

📞 Contact our office today at 561-995-0064 if you have questions or need assistance determining your filing obligations.

We’re here to help and ensure you stay in compliance with evolving tax requirements.

Stay safe and well,

Lerro & Chandross PLLC

The Premium Tax Credit (PTC) is a refundable tax credit that helps individuals and families afford health insurance purchased through a Marketplace under the Affordable Care Act (ACA). The American Rescue Plan Act of 2021 (ARPA) introduced several temporary but impactful enhancements to this credit.

Expanded Eligibility for Taxpayers Over 400% of the Federal Poverty Level (FPL)

Before ARPA:
Taxpayers with household income above 400% of the FPL were not eligible for the PTC.

Under ARPA (2021–2022):
The income cap is eliminated. Taxpayers above 400% of the FPL can now qualify for the PTC.

Example:
A single 45-year-old with $58,000 in income (450% of FPL) would not have qualified under previous rules. Under ARPA, they may now receive a PTC of approximately $1,250.

New Percentage Tables Increase PTC Amounts

PTC is calculated based on the cost of a benchmark health plan minus the taxpayer’s required premium contribution, which is tied to household income.

ARPA Changes:

• Reduces the maximum premium contribution to 8.5% of income (from 9.83%) for 2021 and 2022.

• Expands support for those at lower income levels.

Example:
A 21-year-old at 150% of FPL may see their PTC increase from $3,500 to $4,300 under ARPA.

Special Rule for Unemployment Compensation Recipients in 2021

If you received (or were approved to receive) unemployment compensation for at least one week in 2021, the following applies:

• You automatically qualify as an eligible PTC recipient (unless you’re eligible for affordable employer coverage).

• Your household income above 133% of FPL is disregarded when calculating your PTC.

This effectively caps your required contribution and boosts your PTC, regardless of actual income above 133% of FPL.

No Repayment of Excess Advance PTC for 2020

Under normal rules, if advance PTC payments exceed the actual calculated credit, the overage must be repaid as additional income tax (subject to a cap).

ARPA Exception (2020 only):
If advance PTC exceeded your actual credit in 2020, you do not have to repay the excess.

Important Note:
If you’ve already filed your 2020 return and repaid excess credit, the IRS advises not to amend your return yet. Guidance on refund procedures is forthcoming.

Contact Us

Questions about your eligibility or tax return?
📞 Call us at 561-995-0064 to speak with a tax advisor.

On March 10, 2021, the House of Representatives passed the American Rescue Plan Act (ARPA), H.R. 1319. Below is a summary of key tax and benefit provisions included in the final legislation.

Unemployment Benefits

• The first $10,200 in 2020 unemployment benefits is tax-free for taxpayers with adjusted gross income (AGI) under $150,000.

Recovery Rebates (Third Stimulus Payments)

• Individuals receive a $1,400 recovery rebate credit, or $2,800 for joint filers, plus $1,400 per dependent, including college students and qualifying relatives.

• Income phaseout begins at:

  • $75,000 for single filers (fully phased out at $80,000)

  • $150,000 for joint filers (fully phased out at $160,000)

  • $112,500 for heads of household (fully phased out at $120,000)

• Eligibility determined using 2019 AGI unless the 2020 return has been filed.

COBRA Continuation Coverage

• Provides premium assistance through September 30, 2021.

• Eligible individuals can receive 100% subsidy for COBRA premiums.

• Employers claim a refundable tax credit against Medicare payroll tax (Sec. 3111(b)).

• No income tax inclusion for COBRA premium assistance.

• Penalties apply for failure to notify cessation of eligibility (Sec. 6720C).

Expanded Child Tax Credit (2021 Only)

• Increases credit to:

  • $3,600 per child under 6

  • $3,000 per child ages 6–17

• Fully refundable and available to 17-year-olds.

• Phaseout thresholds:

  • $150,000 (MFJ)

  • $112,500 (HOH)

  • $75,000 (others)

• Advance monthly payments to begin July through December 2021.

• Excess payments may need to be reconciled on 2021 return, with safe harbor protections for lower-income taxpayers.

Earned Income Tax Credit (EITC) Enhancements

• Expands eligibility for childless individuals:

  • Lowers age to 19 (or 18 for certain youth); no upper age limit.

• Increases phaseout amounts and disqualifying investment income threshold to $10,000.

• Taxpayers may use 2019 income instead of 2021 income for a higher credit.

Child and Dependent Care Credit (2021 Only)

• Fully refundable for 2021.

• Credit covers 50% of eligible expenses up to:

  • $4,000 for one qualifying individual

  • $8,000 for two or more

• Credit begins to phase out at $125,000 household income.

• Employer-provided dependent care exclusion increased to $10,500.

Paid Sick and Family Leave Credits

• Extended through September 30, 2021.

• Employers may claim credits under Sections 3131–3133.

• Paid leave includes:

  • COVID-19 illness, quarantine, testing, or vaccination

• Maximum credit for family leave increased to $12,000.

• Self-employed individuals may use up to 60 days.

• Leave reset for additional 10 days after March 31, 2021.

• Credits extended to 501(c)(1) government organizations.

Employee Retention Credit

• Extended through December 31, 2021.

• Credit allowed against Medicare tax (Sec. 3111(b)).

Premium Tax Credit (Health Insurance Marketplace)

• Enhanced for 2021 and 2022.

• No repayment of excess advance premium credits for 2020.

• Anyone approved for unemployment compensation in 2021 is treated as an applicable taxpayer for PTC eligibility.

Student Loan Discharge Exclusion

• Loan forgiveness between January 1, 2021, and December 31, 2025, is excluded from gross income.

Other Provisions

• Section 162(m): Expands $1 million deduction cap for executive compensation to include the five highest-paid employees (effective after 2026).

• Section 461(l): Extends the limitation on excess business losses for noncorporate taxpayers through 2027.

• Repeal of Section 864(f): Eliminates worldwide interest allocation election.

• Targeted EIDL Grants and SBA Restaurant Grants:

  • Excluded from gross income

  • No deduction denial, basis adjustment, or attribute reduction

• Multiemployer Pension Plans: Temporary relief for certain designation statuses and funding changes.

For assistance in understanding how these provisions impact your tax situation or business, contact our office to schedule a consultation.

If you have not received a PPP loan before, First Draw PPP Loans may be available to you.

Two things to know about the Paycheck Protection Program (PPP) first draw enacted on December 27, 2020:

• The first draw is for those who missed getting in on the original PPP, which expired on August 8, 2020.
• Don’t think of a PPP draw as a loan. It’s not a loan. It’s a cash infusion. You have to repay a loan. You don’t have to repay the PPP funds.

Who qualifies for first-draw PPP money today? You, most likely—if you file a business tax return and have not yet received any PPP monies.

But don’t wait. The money is going to run out fast, and once it’s gone, so is the PPP. And the new PPP ends March 31, even if the money is not gone by then.

You qualify for the PPP if any of the following are true:

• You file your taxes on Schedule C of your tax return. Businesses that file on Schedule C include independent contractors (often called 1099 folks), single-member LLCs, proprietorships, and statutory employees such as life insurance salespeople.
• You file your taxes on Schedule F (ranchers and farmers).
• You are a general partner in a partnership, but the partnership asks for and receives the money based on your and the other partners’ combined self-employment incomes, as adjusted.
• You operate as an S corporation.
• You operate as a C corporation.
• You are the only worker in the business—and if you have employees in the business, you qualify on both your ownership worker status and your employees’ W-2 status.

On December 21, 2020, Congress passed H.R. 133, the Consolidated Appropriations Act (CAA), 2021, which includes:

• Division N – Additional Coronavirus Response and Relief (ACRR)

• Division EE – Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTR)

The bill passed with strong bipartisan support and is expected to be signed into law. Below is a summary of the most relevant provisions for individuals and small businesses.

Individual Economic Relief

• $600 Stimulus Payments
  Individuals earning up to $75,000 (or $150,000 for married couples) will receive $600, plus $600 for each child dependent.

• $300 Weekly Unemployment Boost
  Additional federal unemployment benefits are reinstated through March 14, 2021, with eligibility extended through April 5, 2021, and maximum weeks increased to 50 weeks.

Business Meals Deduction

To support the restaurant industry, businesses can now deduct 100% of restaurant meals (dine-in and takeout) for expenses incurred from January 1, 2021 through December 31, 2022.

Paycheck Protection Program (PPP) Updates

• Second Round of Funding
  Eligible businesses may apply for a second PPP loan of up to $2 million, provided they:

  • Employ 300 or fewer employees per location

  • Have used or will use their first PPP loan

  • Experienced at least a 25% drop in gross receipts in any 2020 quarter compared to the same quarter in 2019

  Special Rule for Hospitality and Food Services:
  These businesses may borrow up to 3.5x average monthly payroll costs, still capped at $2 million.

• PPP Expense Deductibility Clarified
  PPP loan forgiveness is not taxable, and expenses paid with PPP funds are fully deductible, allowing for full tax benefits.

• EIDL Advance Adjustment Repealed
  PPP borrowers are no longer required to reduce their forgiveness amount by the EIDL advance they received.

• Simplified Forgiveness for Loans Under $150,000
  Borrowers can submit a simplified certification of eligibility and retain records for possible SBA review.

• Expanded Eligible Expenses
  In addition to payroll, rent, utilities, and mortgage interest, businesses can now use PPP funds for:

  • Personal protective equipment (PPE) and facility modifications

  • Supplier costs essential to operations

  • Software and cloud-based services

  • Accounting services

Grants for Shuttered Venue Operators

$15 billion is allocated for grants to eligible live venue operators, theaters, museums, promoters, and talent agents.

• Must show 25% revenue reduction

• Tiered distribution prioritizes applicants with the most significant revenue losses (90%+ or 70%+ revenue decline compared to 2019)

At least $2 billion is reserved for venues with fewer than 50 full-time employees.

Paid Leave Tax Credit Extensions

• Employer Paid Sick and Family Leave Credits
  Extended through March 31, 2021. Employers are not required to offer leave, but if they do, credits are available.

• Self-Employed Leave Credits
  May continue using 2019 earnings instead of 2020 to calculate credit amounts.

• Payroll Tax Treatment
  Qualified wages under this leave program are excluded from Social Security tax.

Deferred Payroll Tax Repayment Extension

Employers that postponed the 6.2% employee Social Security tax in 2020 now have until December 31, 2021 to repay it, with penalties and interest delayed until January 1, 2022.

Employee Retention Credit (ERC) Expansion

Changes apply to wages paid through June 30, 2021:

• Credit rate increased from 50% to 70% of qualified wages

• Per employee wage limit increased to $10,000 per quarter

• Applies to employers with 500 or fewer employees

• New employers that did not exist in 2019 may also qualify

Employers can now claim both PPP and ERC, subject to restrictions.

Unemployment Insurance Enhancements

• Extended Pandemic Unemployment Assistance (PUA) through March 14, 2021

• $300/week federal supplement reinstated

• State reporting required to track individuals refusing to return to suitable work

If you have questions about how these provisions affect your business or individual situation, contact our office at 561-995-0064 for assistance.

Approximately 50,000 “catch-up” economic impact payments will be made to individuals whose portion of the stimulus payment was diverted by the federal government to pay their spouse’s past-due child support by the IRS.

These funds are expected to be sent in early to mid-September and will mailed as checks to any eligible spouse who filed a Form 8379, Injured Spouse Allocation, along with their 2019 federal income tax return, or in some cases, their 2018 return. The IRS will automatically issue the portion of the EIP that was applied to the other spouse’s debt. These individuals do not need to take any further action to receive the extra economic impact payment money.

Under the CARES Act, the IRS deposited or mailed stimulus payments known as economic impact payments of $1,200 to eligible taxpayers, along with an extra $500 per child. However, in some cases the IRS subtracted money from the payments for those who owed child support to their former spouses. The IRS plans to send the money to 50,000 individuals who were owed child support.

The IRS has noted that it is aware that some individuals did not file a Form 8379, Injured Spouse Allocation, and therefore did not receive their part of the EIP for the same reason. The IRS doesn’t yet have a timeframe but plans to automatically issue the part of the EIP that was applied to the other spouse’s debt at a later time. If you are effected by this, you can check the status of their EIP by using the Get My Payment tool, available only on IRS.gov.

The Small Business Administration (SBA), in consultation with the Department of the Treasury released a set of “Frequently Asked Questions” (FAQs) addressing loan forgiveness issues under the Paycheck Protection Program (PPP) as administered by the Small Business Administration (SBA).

Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation, in consultation with the Department of the Treasury, of the CARES Act, the Flexibility Act, and the Paycheck Protection Program Interim Final Rules (“PPP Interim Final Rules”)

Newly Released SBA FAQ Sections & Highlights

General Loan Forgiveness FAQs:

This section contains three FAQs. The first one clarifies that sole proprietors, independent contractors, and self-employed individuals who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form automatically qualify to use the PPP Loan Forgiveness Application Form 3508EZ.

Loan Forgiveness Payroll Costs FAQs:

This section contains eight FAQs here are some highlights from this section.

Question No. 4 explains that the gross amount before deductions for taxes, employee benefits payments, and similar payments, or the net amount paid to employees should be used when calculating cash compensation.

Question No. 5 gives more detail on Payroll costs covered by the loan forgiveness, which include all forms of cash compensation paid to employees, including tips, commissions, bonuses, and hazard pay. Note that forgivable cash compensation per employee is limited to $100,000 on an annualized basis.

Question No. 8 explains how is the amount of owner compensation that is eligible for loan forgiveness determined. The answer explains that the amount of compensation of owners who work at their business that is eligible for forgiveness depends on the business type and whether the borrower is using an eight-week or 24-week Covered Period. It also provides examples for owners of C and S corporations, self-employed Schedule C (or Schedule F) filers, general partners, and LLC owners. An owner-employee is defined as someone who is both an owner and an employee of a C corporation. The term was previously referred to in the PPP loan forgiveness application but not defined. Also addressed are partial pay periods, group health care benefits, and two questions related to payroll costs that were incurred or paid outside of the eight-week or 24-week covered periods.

Loan Forgiveness Nonpayroll Costs FAQs:

This section includes seven FAQs which address rent, lease, and mortgage payments, utilities, and transportation.

Question No. 6 provides that payments of transportation utility fees assessed by state and local governments are eligible for loan forgiveness. Also answered are two questions related to nonpayroll costs that were incurred or paid outside of the eight-week or 24-week covered periods and whether the Alternative Payroll Covered Period for payroll costs also applies to nonpayroll costs (it doesn’t).

Loan Forgiveness Reductions FAQs:

This section includes five FAQs which give more clarity on FTE employees, seasonal employers, and alternative payroll.

Question No. 4 addresses how calculations should be made by borrowers for the reduction in their loan forgiveness amount arising from reductions in employee salary or hourly wage. Three examples of the salary/hourly wage reduction are included which provide more insight.

Download the Full FAQ’s Document Click Here

The AICPA will provide more analysis and insights into the FAQs on Thursday, August 6th during its next PPP town hall, which will start at 3 p.m. ET.

“The FAQs have addressed a number of the outstanding questions, but there are still some gray areas,” said Lisa Simpson, CPA, CGMA, director–Firm Services for the Association of International Certified Professional Accountants. “In addition, there are still remaining open items such as how will FTE reductions work if applying for forgiveness before the end of the covered period. We will discuss all of this in greater detail on Thursday’s town hall.”

Through July 31, the PPP has funded nearly 5.1 million forgivable loans totaling more than $521 billion to help small businesses and other eligible entities impacted by the recession sparked by the COVID-19 pandemic. More than $130 billion is still available in the PPP, which has an Aug. 8 deadline for applications to be approved by SBA. Congress is currently considering a follow-up to PPP that would provide more targeted assistance to small businesses.

Quick Summary of the Paycheck Protection Program

The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Created by Congress as part of a $2 trillion dollar Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. The PPP provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. These funds can also be used to pay interest on mortgages, rent, and utilities.

The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing up to $659 billion toward job retention and certain other expenses. Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.