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On May 22, 2020, the Small Business Administration (“SBA”), released a supplement (the “Rule“) to the initial Paycheck Protection Program (“PPP”) Interim Final Rule, published on April 2, 2020. The Rule provides clarity with respect to certain provisions of the PPP and the PPP Loan Forgiveness Application, issued on May 15, 2020 (the “Application“), as follows:
Incurred and/or Paid Expenditures
The Rule provides that payroll costs paid or incurred during the eight consecutive week (56 days) covered period are eligible for forgiveness. Specifically, borrowers may seek forgiveness for payroll costs for the eight weeks beginning on either:
i. The date of disbursement of the borrower’s PPP loan proceeds from the Lender (i.e., the start of the covered period); or
ii. The first day of the first payroll cycle in the covered period (the “Alternative Payroll Covered Period”).
Further, the Rule provides the following with respect to when payroll costs are considered paid or incurred:
Payments to Furloughed Employees, Bonuses, and Hazard Pay
The Rule provides that if an employee’s total compensation does not exceed $100,000 on an annualized basis, the employee’s hazard pay and bonuses are eligible for loan forgiveness because these payments constitute a supplement to salary or wages, and are thus a similar form of compensation.
Caps on Compensation to Owner-Employees and Self-Employed Individuals
The Rule provides the following with respect to owner-employees and self employed individuals:
The Rule confirms that non-payroll costs are eligible for forgiveness if they are:
i. Paid during the covered period, or
ii. Incurred during the covered period and paid on or before the next regular billing date.
In addition, the Rule provides the following example with respect to non-payroll costs:
Example: A borrower’s covered period begins on June 1 and ends on July 26. The borrower pays its May and June electricity bill during the covered period and pays its July electricity bill on August 10, which is the next regular billing date. The borrower may seek loan forgiveness for its May and June electricity bills, because they were paid during the covered period. In addition, the borrower may seek loan forgiveness for the portion of its July electricity bill through July 26 (the end of the covered period), because it was incurred during the covered period and paid on the next regular billing date.
Prepayments of Mortgage Interest
The Rule provides the following with respect to payments made in connection with mortgage obligations:
Reductions to Loan Forgiveness Amount
The Rule provides the following with respect to FTEs:
Salary/Hourly Wage Reductions
Fired for Cause/Resignations/Voluntary Reductions
Such employees are exempt from the calculation of the FTE reduction penalty.
SBA Guidance Addressing Loan Review Procedures
On May 22, 2020, the Small Business Administration (“SBA”), released an additional supplement (the “Second Rule“) to the initial Paycheck Protection Program (“PPP”) Interim Final Rule, published on April 2, 2020. The Second Rule provides guidance to borrowers and lenders concerning the SBA’s review process under the PPP, as follows:
SBA Review Authority
The Second Rule provides that the SBA:
Borrower Representations and Statements
The Second Rule provides that the SBA is authorized to review the following in connection with the PPP:
If the SBA identifies that the borrower may be ineligible for a PPP loan in general or ineligible to receive the requested forgiveness amount, the SBA may require the lender to obtain additional information from the borrower, or the SBA may request information directly from the borrower. The SBA will consider all additional information from the borrower in completing its analysis.
The Second Rule provides that each lender is required to:
1. Confirm receipt of the borrower certifications in the application;
2. Confirm receipt of documentation to aid in verifying payroll and non-payroll costs;
3. Confirm the borrower’s calculations on the loan forgiveness application (including cash compensation, non-cash compensation, and compensation to owners, as well as non-payroll costs) by reviewing the documentation submitted with the application, and
4. Confirm that non-payroll costs do not exceed 25% of the loan forgiveness request.
In addition, please note that the Second Rule provides the following with respect to a lender’s review process:
SBA Review Process
On May 22, 2020, the Louisiana Department of Revenue (“DOR”) released Revenue Information Bulletin No. 20-012 to grant relief to state sales tax filers for the March and April 2020 state sales tax periods and to provide clarification regarding notices relative to the February 2020 state sales tax period. As a caveat, the DOR’s relief provisions are not applicable to any city or parish sales tax that may be due for such periods.
March and April 2020 State Sales Tax Periods
The March and April 2020 state sales tax returns and payments were due April 20 and May 20, 2020, respectively. In light of the ongoing COVID-19 public health emergency, the DOR will grant automatic penalty relief to taxpayers who missed those dates if certain conditions are satisfied:
A. The taxpayer must file the March and April 2020 state sales tax returns and remit the sales tax and any deficiency interest by June 30, 2020; or
B. If a taxpayer is unable to remit the sales tax and any deficiency interest by June 30, 2020, penalty relief will be granted if the taxpayer submits and enters into an Installment Request for Business Taxes by June 30, 2020. Taxpayers may submit an Installment Request for Business Taxes by completing and mailing in Form R-19027 or by applying online through the Louisiana Taxpayer Access Point online system.
For the March 2020 state sales tax period, the DOR has sent self-assessment bills to taxpayers who filed a March 2020 state sales tax return but did not remit all tax shown due on the return, but taxpayers are not required to pay the penalties shown on the notice if they satisfy one of the above-described conditions.
February 2020 State Sales Tax Period
The DOR previously provided in Revenue Information Bulletin 20-008 that February 2020 state sales tax returns payments were extended from March 20, 2020, to May 20, 2020. In Bulletin No. 20-012, the DOR now states that if a taxpayer receives any collection type notice resulting from an unfiled February 2020 state sales tax return, the taxpayer may disregard this notice because such notices have been voided in the DOR’s records and no action is necessary by the taxpayer.
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