Breaking News: Paycheck Protection Program Update 4-5-2020

Posted on: 4/5/20 by Kevin P. O'Leary, CPA

The AICPA released a special update late on Saturday, April 4 regarding the Paycheck Protection Program (“PPP”), which authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.

The AICPA Coalition recommends PPP applicants use gross payroll approach in calculations. Read below and click the links to be lead to the AICPA Coronavirus Resource Center for additional information.

April 4, 2020 — Volume 27 No. 22
AICPA News Update

Many of you have raised questions related to the salary calculation for the Paycheck Protection Program loan application. Yesterday, our AICPA-led coalition on small business funding, in conjunction with the National Payroll Reporting Consortium (NPRC), gathered to discuss the appropriate method for calculating Average Monthly Salary.

For the calculation of the average monthly payroll cost, applicants should use grosspayroll (including tax expenses) — based on 2019 data — for the PPP loan application and forgiveness.
Our recommendation is based upon both the word and intent of the law. Neither the CARES Act itself nor the guidance the Small Business Administration (SBA) released Thursday evening specifically stated that payroll taxes should be excluded from the calculation. Additionally, based upon statements from members of Congress, it appears that the intent of the Act was to base the salary calculation on gross payroll with no adjustment for federal taxes. This ensures that payroll tax expenses are not passed on to the small businesses in need.

We know there are additional questions and concerns with the application process, and we are working diligently with our coalition partners to provide guidance as quickly as we can to expedite implementation. Here are three points that address some of the issues we are hearing from members.
  • As the SBA released guidance late Thursday evening, many banks are still working to get their loan application processing systems online. We are in discussions with the banking industry, which is working to get these systems online as quickly as possible.
  • Additionally, the Trump Administration has said that it will ask Congress for additional funding for small businesses if the initial $350 billion runs out.
  • Finally, we are developing information on how to determine other application calculations and are also working on a list of recommended documents that banks should accept for loan applications and forgiveness. Continue to watch your email and the AICPA Coronavirus Resource Center for these tools.
Our discussions with the Treasury Department, SBA, banks and payroll processors to address these and other issues are ongoing. We will keep you updated on our progress here and in our other efforts to protect Main Street America.

ALSO NOTE: We will be hosting another special webinar TUESDAY, April 7 at noon covering the CARES Act and focusing on business tax changes and more importantly the impact of the new SBA programs now that more clarification has been released. Stay tuned for that email invite later today.

Visit our special Coronavirus Resources and Information page for additional information.

Stay healthy!

Kevin P. O'Leary, CPA, Managing Director

Marvin University

The Marvin University professors are here to help your organization. see our list of upcoming educational events and download past sessions.

Community Involvement

We not only provide professional services to the not-for-profit industry, we provide our own time and resources.
Learn more here.

Careers

Start shaping your future at Marvin and Company today.