Podcast: Should borrowers submit PPP loan forgiveness applications early? This Tax alert provides a brief overview of the federal legislation relating to the PPP, summarizes the notable changes to California law made by A.B. 17 (A.B. For taxpayers other than ineligible entities, A.B. Your access to this site was blocked by Wordfence, a security provider, who protects sites from malicious activity. But yesterday, the Calfornia Senate approved AB 80, which would make forgiven PPP loans tax-deductible - and give businesses a breather. The PPPEA was enacted on March 30, 2021 and extended the covered period of the PPP from March 31, 2021, through June 30, 2021. People are hungry and hurting, and businesses our communities have loved for decades are at risk of closing their doors. The compromise builds on the initiatives in the Governors state budget proposal to provide cash relief to lower-income Californians, increase aid to small businesses and provide license renewal fee waivers to businesses impacted by the pandemic. document.write(new Date().getFullYear()) California Franchise Tax Board. Assembly Bill 80 (AB 80) allows qualifying taxpayers to exclude from California gross income Paycheck Protection Program (PPP) loans that have been forgiven, and advance grants provided under the Economic Injury Disaster Loan (EIDL) program. On Sept. 9, 2020, which was after the IRS released Notice 2020-32 but before the CAA was signed, California enacted legislation, A.B. 12 CAL. (%mu9YS-+e"D3mU3]3|.efah4Yi^=|jmMg16^2*5+Qh . Your ERM needs to cover new gaps and drive new value. 80 provides much needed guidance clarifying Californias treatment of deductions for expenses paid with forgiven PPP loan proceeds. Paycheck Protection Program Loan Forgiveness and Treatment - California AB 80 generally conforms to the federal treatment of PPP loan forgiveness and EIDL grants, with one major exception. For additional information, visit Section 311 of the CAA, 2021, Revenue and Taxation Code (RTC) section 17131.8(g)(3)), and Small Business Administration (SBA) guidance. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. 2021-20 for federal purposes, we will follow the federal treatment for California tax purposes. We cannot guarantee the accuracy of this translation and shall not be liable for any inaccurate information or changes in the page layout resulting from the translation application tool. A.B. The fourth quarter of 2020 and 2019 only becomes a measure in this test if taxpayers submit their PPP loan application on or after January 1, 2021. These pages do not include the Google translation application. California Conforms to Federal PPP Loan Forgiveness Rules 17 A.B. What will help even more is using a holistic approach to create a winning strategy. A sign calling for student loan debt relief is seen in front of the Supreme Court as the justices are scheduled to hear oral arguments in two cases involving President Joe Biden's bid to reinstate . The SBA offered banks, and later fintech companies, processing fees based on the size of loans, which ranged from 5% for loans of $350,000 or less to 1% for loans of $2 million. This agreement builds on Governor Newsoms proposal and in many ways, enhances it so that we can provide the kind of immediate emergency relief that families and small businesses desperately need right now, said Senate President pro Tempore Atkins. Specifically, A.B. NmIyNjRmZjA0MDdkNzU5Y2IwOGU3MjMzZTk5MTBkNmQwYTY0OTQ3YTg3ODc1 15 U.S.C. If your PPP amount is over $150, 000 and you received your PPP loan through a bank in the SmartBiz network, your bank will be contacting you directly about applying for Forgiveness. Friday, September 18th, 2020. SESS. 311 0 obj <>stream 116-136. 9 For additional details relating to the federal Flexibility Act, please refer to the Deloitte Tax News & Views Capitol Hill Briefing, dated June 12, 2020 (available here). Matt Tierney and Andre Bourgon from Grant Thornton discuss how to execute a winning ecosystem strategy to manage insurance companies. Your business does not meet PPP loan forgiveness requirements. California Largely Conforms to Forgiven PPP Loan Deductibility 1557 to provide some relief.6, On March 27, 2020, the federal government enacted the CARES Act in response to the COVID-19 pandemic.7 Sections 1102 and 1106 of the CARES Act amend section 7(a) of the Small Business Act to create the PPP, through which up to $349 billion in funding was provided to businesses through federally guaranteed loans. Multistate Tax alert | September 30, 2020. He has 22 years of broad-based SALT consulting experience at the national and practice office levels in large public accounting firms. A disallowance of the deductions effectively neutralized the benefit of the tax-exempt nature of the PPP loan forgiveness. The new federal resources will extend care for children of essential workers through June of 2022, and funds increased access to subsidized child care for more than 8,000 children of essential workers and at-risk children who are not currently served in the system through June of 2022. NDZkZjRjZDY4ODVjMjk3OGE5MjViODBjYjExOTliZWFhNzgwY2FjMTkzYjll ZjM5OWM1NmRhZmIzYzYxY2VlZmY4NDExYjhjMDA0YmRlOThjMjBhYjk3Nzkz ZTI5MDAwNDczOWI5MWMxY2RlNWVhNzcyY2Q3OWVmNmI2N2Y2ODEyZmM1NTYz Modesto, CA 95350, (209) 527-4220 (phone) 297 0 obj <>/Filter/FlateDecode/ID[<681772630396424DB877BF5F6FFE419B>]/Index[276 36]/Info 275 0 R/Length 98/Prev 155748/Root 277 0 R/Size 312/Type/XRef/W[1 2 1]>>stream Find out how the technology, banking and asset management sectors are adapting their strategies to handle todays threats. 13 Specifically, A.B. Please search again using different keywords and/or filters. Scott Smith, State & Local Tax, National Technical Practice Leader, Business Restructuring & Turnaround Services, Total Tax Transparency & ESG Tax Strategy, Financial Institutions & Specialty Finance, California: Update to Paycheck Protection Program Loan Conformity, Do Not Sell My Personal Information as to BDO Investigative Due Diligence. Borrowers that need assistance or have questions should call the SBA at (877) 552-2692, Monday - Friday, 8 a.m. - 8 p.m. EST. ODE0ZjA1OTZlMmYzNGViM2E4NWJiYTMwNzQ0N2I2YmVhZTE1MDVlNWJjOTJk MzA1NjUwNDUyNzBkY2M0YTcxMWY2NGYzZjRhMzk3NGVkODkwNWRlNjQ0YWY2 We understand you. On September 29, 2022, AB 158 was enacted to add an operative date of January 1, 2019 for the PPPEA to ensure taxpayers that had loans made during PPPEA would be eligible for the income exclusion and other applicable tax treatment. From child care, relief for small business owners, direct cash support to individuals, financial aid for community college students and more, these actions are critical for millions of Californians who embody the resilience of the California spirit., Were nearly a year into this pandemic, and millions of Californians continue to feel the impact on their wallets and bottom lines. REV. REV. 80s gross income exclusion also extends to any Economic Injury Disaster Loan (EIDL) advance grants received under the CARES Act and the CAA.12, Though enacted later than many taxpayers would have liked, A.B. endstream endobj 212 0 obj <>/Pages 210 0 R/StructTreeRoot 12 0 R/Type/Catalog/ViewerPreferences 230 0 R>> endobj 213 0 obj <>/MediaBox[0 0 612.12 792.12]/Parent 210 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/Rotate 0/StructParents 0/Tabs/S/Type/Page>> endobj 214 0 obj <>stream PDF California Law Excludes PPP Loans Forgiven under the CARES - Deloitte Exceptional organizations are led by a purpose. 80's treatment of expenses paid with forgiven loan proceeds A.B. It does not apply to SBA subsidies paid on SBA loans, Shuttered Venue Operator Grants, or Restaurant Revitalization Grants. GTIL does not deliver services in its own name or at all. According to the legislative analysis, this date was changed to ensure that all fiscal year filers are captured. Onlyagross receiptsreduction inone quarterin2020mustmeet this25%thresholdtoqualifyforthe PPP loan expense deduction, assuming the entity is notpublicly traded. x000K@4CgCGt@1: L%v5Fo- j-YW v Gavin Newsom signed Assembly Bill 80 (A.B. MzZiNmY3MzJiY2FhODEyYjI2YzU5MzE4ZWE1NTYxNjAxZmVkNTg1ZjYyYzVh To help guide planning, weve highlighted key topics under focus from regulators worldwide and what those developments could mean for business. 2 A.B. SB 113 also allows the deduction of expenses, basis adjustments, and tax attribution adjustments for qualifying taxpayers for SVO and RRF grants. For California purposes, forgiven PPP loans, SVO grants, and RRF grants are excluded from gross income. You can outsource cybersecurity, but you can't outsource your risks. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. This message will not be visible when page is activated. Californians have been hurting. GTIL refers to Grant Thornton International Ltd (GTIL). 2020-27. Emergency Financial Relief to Support Community College Students. The new legislation supersedes AB 1577. 5 INCOME TAXES: FEDERAL CARES ACT: GROSS INCOME: LOAN FORGIVENESS, JULY 8, 2020 (available here). Gavin Newsom signed Assembly Bill 80 (AB 80), which generally conforms to the federal income tax treatment of Paycheck Protection Program (PPP) loan forgiveness and of the deductibility of expenses paid with a PPP loan that is forgiven, with a notable exception. This is alyx our streamlined concierge-enabled platform that connects real problems with the right resources and real solutions. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Sec. 1557 generally conforms California to federal law allowing an exclusion from gross income for covered Paycheck Protection Program (PPP) loans that are forgiven as a part of the federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). & TAX. A.B. REV. Paycheck Protection Program (PPP) loan forgiveness | COVID-19 - California 229 0 obj <>/Filter/FlateDecode/ID[<53445A688FC0F84BB5871A6886EB3172>]/Index[211 40]/Length 93/Prev 93697/Root 212 0 R/Size 251/Type/XRef/W[1 3 1]>>stream This content supports Grant Thornton LLPs marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. Connecting with our core purpose through a renewed lens. See how we connect, collaborate, and drive impact across various locations. On February 9, 2022, Senate Bill (SB) 113 (Economic Relief) was enacted to allow an income exclusion for Shuttered Venue Operator (SVO) grants provided under CAA for tax years beginning on or after January 1, 2019 and for Restaurant Revitalization Fund (RRF) grants provided under ARPA for taxable years beginning on or after January 1, 2020. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. 80 has been satisfied to avoid being classified as an ineligible entity.. 21-17) does not apply to either first- or second-draw loans received after March 31, 2021. US affiliates to deem to elect waters edge, California legislature allows group returns for international business travelers. 80 generally allows for the deductibility of such expenses in years beginning on or after Jan. 1, 2019, provided the taxpayer is not an ineligible entity.9 The legislation defines an ineligible entity as any publicly-traded company, or any entity that does not meet the 25% reduction in gross receipts requirements of 15 U.S.C. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. California aligning with fed PPP loan treatment | Grant Thornton See Terms of Use for more information. NThmOTI5NTJhNjc1MTk0MWYwNDRhODc5Yjk0NWRlY2MxOGViMzcwMTViODJl L. No. Please enable JavaScript to view the site. Governor Gavin Newsom has signed Assembly Bill 80, to amend the law. PDF Rev. Rul. 2020-27 ISSUE - IRS The ARPA expanded the PPP to include certain nonprofit entities and certain internet publishing organizations. As we continue to fight the pandemic and recover, Im grateful for the Legislatures partnership to provide urgent relief and support for California families and small businesses where its needed most, said Governor Newsom. -----BEGIN REPORT----- To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Additionally, A.B. Notice 2020-32 (available here). In addition to these measures, the agreement provides tax relief for businesses, commits additional resources for critical child care services and funds emergency financial aid for community college students. California PPP Update 4.26.2021 : taxpros - reddit As a result, it provided no California tax relief for fiscal year taxpayers whose tax year began before January 1, 2020, but who obtained a PPP loan after January 1, 2020. & TAX CODE 24271. For tax years beginning in 2019, qualifying taxpayers can now exclude PPP loan forgiveness or EIDL grants from California gross income and deduct allowable covered expenses paid with PPP loan or EIDL grant proceeds. California: Update to Paycheck Protection Program Loan Conformity California conforms to the federal gross receipts test requiring a 25% or greater reduction in gross receipts and will therefore follow the rationale of this related federal guidance. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year. -----END REPORT-----. YjFhOWM4Y2FkNDM3NWJjM2ZmZjE2YmFmNjhlNjc3MDJjM2Q3NjJhMmE1NDgz There has been no activity, and we can't get good information on when and if it will pass, and what will actually be included in the final bill. Careful consideration will need to be given to these issues, as well as the need for documentation to support that the 25% diminution in gross receipts requirement of A.B. 19 A.B. and CTL purposes. This is important new information that needs to be shared with businesses immediately and it will likely come as a surprise to many. California law excludes PPP loans forgiven under the CARES Act from gross income has been saved, California law excludes PPP loans forgiven under the CARES Act from gross income has been removed, An Article Titled California law excludes PPP loans forgiven under the CARES Act from gross income already exists in Saved items. 80. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. 80, some California taxpayers may have either filed their 2020 returns prior to its enactment, or made an extension payment based on the provisions of A.B. 2023 Grant Thornton LLP - Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. The new legislation supersedes AB 1577. MTU3YmNhZDYyNDc5ZTczNDMyNzc0ZjU1YTI3NWRlZjg3OWVkNGRiYjAzNjUz 636(a)(37)(A)(iv)(I)(bb). ZTg2N2Y3NGIyZGIwODA1ODY4OWI3ZDYzNWNjOTk5OTUyZmU4YTllMzc2OTVj The COVID-19 is having a huge impact on the global economy, with manufacturers and the travel industry bearing the initial brunt as the impact expands. For a complete listing of the FTBs official Spanish pages, visit La esta pagina en Espanol (Spanish home page). 102-1125) on February 3, 2023, that makes significant enhancements to a variety of Illinois credit and incentive programs. 1577, and provides some taxpayer considerations. If you have any questions related to the information contained in the translation, refer to the English version. We are building an economic foundation for the recovery of jobs, small businesses and, indeed, our everyday lives, said Speaker Rendon. PDF Forgiven Loan Exclusion Expansion & Modified Conformity to - California Taxpayers that have received PPP loans should consult with their California tax advisors regarding the changes made by A.B. Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility. People are having a hard time making ends meet. Note that the citation to the federal law presumably should be 15 U.S.C. Forms, publications, and all applications, such as your MyFTB account, cannot be translated using this Google translation application tool. NmIyYjY1ZGFjODY4OTViMmNkMGJiYjAzM2JjYTBhMDJhZDYyYThmNTg3Yjcw 1557 generally conforms California to federal law allowing an exclusion from gross income for covered Paycheck Protection Program (PPP) loans that are forgiven as a part of the federal Coronavirus Aid, Relief, and Economic . 116-136. If you are a WordPress user with administrative privileges on this site, please enter your email address in the box below and click "Send". NDEyZDM0YmQ2MzdjM2I1OTg1YmYxMTdhYzE2OWE5MWEyMjJkYTM5ZTg4ZjYw 9 Note that the statutes originally applied to taxable years beginning on and after January 1, 2020. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year. 1577) into law.1 A.B. 80. 0 Identify how to treat the forgiveness of a PPP loan for tax purposes; Recognize how the IAS 20 grant approach is used to account for its PPP loan; Recognize actions that impact a CPA's independence in a PPP loan assistance engagement; Recall some of the rules pertaining to a CPA receiving an agent fee from a PPP loan lender, and California has NOT passed AB 80: the PPP forgiveness bill March 9, 2021 AB 80, the bill that would allow up to $150,000 of expenses to be deducted if paid with PPP forgiven loan amounts has not yet passed. The agreement also provides $12 million in state funds to support associated county administrative workload. (CAL. The American Rescue Plan Act (ARPA) (Public Law 117-2) was enacted on March 11, 2021. 1577, 1, 2; CALIFORNIA ASSEMBLY FLOOR ANALYSIS, AUG. 29, 2020, INCOME TAXES: FEDERAL CARES ACT: GROSS INCOME: LOAN FORGIVENESS, JULY 8, 2020, Deloitte Heads Up, Volume 27, Issue 8, Highlights of the CARES Act, updated September 18, 2020, Deloitte Tax LLP's Multistate Tax practice, California legislature allows certain non- The agreement also provides a combined $35 million for food banks and diapers. In particular, Californias definition of an ineligible entity borrows its 25% diminution in gross receipts test from the qualification (i.e. If you believe Wordfence should be allowing you access to this site, please let them know using the steps below so they can investigate why this is happening. 200 West Roseburg Avenue Modesto, CA 95350 (209) 527-4220 (phone) (209) 527-4247 (fax) https . You must pay it back within either 3 or 5 years. %%EOF It is unclearhowbusinesses that changed entity types during 2020will apply2019 gross receiptstoqualify for the PPPexpense deduction. The agreement also reflects fee relief for more than 600,000 barbering and cosmetology individuals and businesses licensed through the Department of Consumer Affairs. SBA Forgiveness Portal. At Grant Thornton, we dont just understand your business. If you make an election under Rev. No Results Found. All references to Section, Sec., or refer to the Internal Revenue Code of 1986, as amended. Your access to this service has been limited. SESS., 1 (see new CRTC 17131.8(a)), 2 (see new CRTC 24308.6(a)).
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