JohnH

Oh no! Judy, I was convinced my Facebook arguments were so persuasive they were winning people over to my political opinions and religious views on a regular basis. I'm crushed.

Do you think maybe they filled out the Advance EIDL application incorrectly, stating they have 2 shareholders when in fact they have none?

In my state WC is not a state or local tax and it isn't an employee benefit. It is an insurance plan which simply follows special state guidelines. Not that much different than auto insurance or General Liability insurance. So as much as I'd like to see it included in the forgiveness category, I don't see how based on the info we have now.

I did have one humorous conversation with a friend (not a client). We were discussing an issue of his which is similar to an issue of mine. I finally said something to this effect: "I'm telling you what I'm doing, but I'm not telling you that you should be doing what I'm doing. I may suddenly change what I'm doing if I get different info from the SBA. And I can't promise I'll remember to tell you I changed what I'm doing because I may not even remember this conversation a week or more from now. So take this conversation for what it's worth." He responded "I get it and I appreciate your honesty" (I'm sure in the back of his head he was thinking "I need to keep asking John what he's doing about this.")

Great points Tom. I just started a separate thread on the subject of a special PPP disclaimer, if you (or Lion or cbslee or anyone else) might care to comment. I'm getting concerned about the risks here.

I've become very circumspect about giving advice or opinions about PPP loan forgiveness compliance. I even accidentally posted a rumor on another site in the midst of warning about internet advice based on rumors. Anyhow, I'm beginning to think it might be a good idea to come up with a special disclaimer when discussing PPP with clients. I don't want someone's PPP loan forgiveness to fail in part or in total because they acted on something I said (or something they thought I said). There's just too much at stake with this PPP loan forgiveness. Does anyone here share those concerns and do you have any thoughts on what a special disclaimer may look like?

These problems are a result of the IRS trying to comply with the impetus to push stimulus payments out as quickly as possible in order to achieve an economic goal. They've basically turned an aircraft carrier around in the middle of a battle. The goal of getting the payments out is being achieved in an exceptional manner, but naturally it's messy given the conditions and time frames. I'm not one to compliment the IRS very much, but I think under these circumstances they're doing a fantastic job.

Good result! Be thankful the parents didn't ask you to advance him until he gets it.

Print money? Is that how they do it? I thought the government just went out and got a second job to pay the extra bills when it spends more than it takes in. Wow, was I wrong or what?

I'm still trying to decipher this, especially in light of what happened to me. I received a $2,000 "Advance EIDL" a couple of weeks ago. Thereafter I applied for a PPP, and on the PPP application I reported that I had already received the $2,000 Advance EIDL. I expected the PPP to be a flat 2.5 times my average monthly payroll for 2019. But what I actually received was the 2.5 times my average payroll PLUS $2,000. Some of my clients have received their PPP now, and each of them received the exact amount of 2.5 times their average monthly payroll for 2019. Each of them had previously received their Advance EIDL. I'm the only person so far to have received the PPP in this fashion, and none of my clients do business with the bank I received my PPP from, thus I have no standard of comparison. So either my bank is doing it correctly and everyone else's bank is wrong, or..

I never thought of it as being any other way. It would be absurd to allow a tax deduction for an expense which was paid by a third party. If I volunteer to pay my client's payroll and rent, common sense would indicate they wouldn't expect to take a tax deduction for it.

Medlin's analysis is awesome. Thanks for sharing your knowledge and recommendations on this. I think I'll switch from my erratic "as cash is available" payroll frequency to a weekly payroll for the next 8 weeks.

I went through a similar thought process when applying for the PPP. I'm operating as an S Corp, so I could have easily included the SEP. But I couldn't get any clear guidance at the time so I elected to use S&W without the SEP. It lowered the amount I could borrow but I didn't want to jeopardize the entire application with a potentially insupportable entry. In retrospect I should have run with it. But now at least I have sufficient flexibility to help meet & exceed the 75% requirement.

Yes, functionally the SEP is a benefit identical to a Medical Insurance plan, and there's no question that the MIP is subject to PPP forgiveness. That's part of what makes me inclined to think the SEP contribution would be subject to PPP forgiveness.

That question definitely needs to be settled. Thanks for the heads up. The examples I've seen use the SEP as one of the permissible items to be used in the PPP loan calculation and also in the calculation of the exclusion. They even go so far as to say that the full SEP contribution counts even when the annualized compensation exceeds $100K and is capped (which doesn't apply to me, BTW ). But obviously the final answer will be based on what SBA says is correct. Definitely keeping an eye on this one. It offers some interesting & unique financial planning opportunities for a sole owner.

Your mention of the SEP IRA is an interesting angle as well. I usually fund my prior-year SEP IRA just prior to the extended filing date for the corporate tax return. Wondering if I could designate money toward the current-year SEP IRA within the 8-week window from PPP funds in May, then designate funds for the prior-year SEP IRA later in the year (late Aug or early Sept). It all goes into the same SEP IRA account, but I am able to designate the year at the time the money is transferred into the account. This might work well for a couple of my clients if it's possible to do within the constraints of the SBA rules.

I thought this article presented a very balanced, reasonable perspective on the PPP loan and how to think & act regarding under-spending (less than full loan forgiveness if it appears likely). https://www.forbes.com/sites/tomhager/2020/04/21/you-need-to-change-your-thinking-paycheck-protection-program-ppp/#4bc590e197c0

Best practice is to go to the USPS Zip Code Lookup and determine exactly the address should be formatted. Use this exact format (even if it was slightly different on the original return). I've been through this with a few clients. Believe me, it's worth the effort to check the USSPS site before entering address info on the IRS site. https://tools.usps.com/zip-code-lookup.htm?byaddress

Sometimes it's hard for a person to understand something when they think their best interests may be served by not understanding it.

Bonuses might be a good solution if there aren't any restrictions in the final qualifications. Not to work against the interests of the employees, but is it a better business practice to give away money if one would not have otherwise done so, or to spend the $ on other expenses which do not qualify for forgiveness and just allow that portion to convert to a 1% loan? (After meeting the 75% standard, of course). Presumably a business applying for the PPP is in need of cash - can't afford to spend it needlessly. This PPP presents some very unusual decision-making scenarios.

Just make sure you have him locked down with multiple disclosures so if he gets audited he can't try to point the responsibility finger back at you. You know he will.

I haven't been following much of this, but I'll just say I'll be happy with the loan forgiveness, no matter how the rest of it sorts out. Personally I think as a matter of fairness, free money would override & exclude the use of any other tax benefit regarding that particular expenditure, but maybe I'm missing something in the conversation.

Several people on an investing forum I participate in have been posting that they filed paper returns within the past few weeks, and of course nothing is happening since IRS isn't processing those returns now. So what would happen if the taxpayer e-filed a return now? Presumably it would have processed and the refund would have been issued by the time the IRS gets around to processing the paper return. Would the taxpayer be in any sort of trouble in that situation? IRS should create a check box to enable those e-flinging their return to notify them that it is intended to replace a previously paper-filed return. That would clear things up considerably, although I don't know how many taxpayers might potentially be involved.

Just coming back to support what others are reporting now. This same client went back in this morning and completed the process of entering their bank account information. They first entered the '0" and didn't check either button. That did not work. Then they chose the "Refund" button and entered "0" as the amount. It worked fine. One thing I will mention for clients who aren't able to get past the first screen. The abbreviations for "Street", "Circle", "Boulevard", "Drive" , etc must conform to the USPS guidelines. That's true even if the original return used them incorrectly. So anyone who keeps failing the initial screen should jump over to the USPS Zip code lookup and verify that the address they are entering conforms to those guidelines.

Thanks Rita. I'd say more but I'm tied up all day and am unable to type anything else.