PPP Loans and the New Loan Forgiveness Guidance

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Matthew L. Roberts

Matthew L. Roberts

Principal

469.998.8482
mroberts@freemanlaw.com

Mr. Roberts is a Principal of the firm. He devotes a substantial portion of his legal practice to helping his clients successfully navigate and resolve their federal tax disputes, either administratively, or, if necessary, through litigation. As a trusted advisor he has provided legal advice and counsel to hundreds of clients, including individuals and entrepreneurs, non-profits, trusts and estates, partnerships, and corporations.

Having served nearly three years as an attorney-advisor to the Chief Judge of the United States Tax Court in Washington, D.C., Mr. Roberts leverages his unique insight into government processes to offer his clients creative, innovative, and cost-effective solutions to their tax problems. In private practice, he has successfully represented clients in all phases of a federal tax dispute, including IRS audits, appeals, litigation, and collection matters. He also has significant experience representing clients in employment tax audits, voluntary disclosures, FBAR penalties and litigation, trust fund penalties, penalty abatement and waiver requests, and criminal tax matters.

Often times, Mr. Roberts has been engaged to utilize his extensive knowledge of tax controversy matters to assist clients in their transactional matters. For example, he has provided tax advice to businesses on complex tax matters related to domestic and international transactions, formations, acquisitions, dispositions, mergers, spin-offs, liquidations, and partnership divisions.

In addition to federal tax disputes, Mr. Roberts has represented clients in matters relating to white-collar crimes, estate and probate disputes, fiduciary disputes, complex contractual and settlement disputes, business disparagement and defamation claims, and other complex civil litigation matters.

Only two short months ago, Congress passed the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act.  As many readers are aware, one of the many highpoints of the CARES Act was the Paycheck Protection Program (PPP).  Since its enactment, Freeman Law’s attorneys have extensively covered the PPP, including publishing the following PPP-related materials:

  1. CARES Act Guidance.

 

II.  May 22, 2020 Interim Final Rules.

On May 22, 2020, the SBA, in conjunction with the Treasury Department, issued two additional Interim Final Rules.  The first May 22, 2020, Interim Final Rule provides guidance to borrowers and lenders in preparing and submitting PPP loan forgiveness applications.  That Interim Final Rule can be found here.  The second May 22, 2020, Interim Final Rule provides guidance to borrowers and lenders regarding the SBA’s process for reviewing PPP loan applications and loan forgiveness application forms.  That Interim Final Rule can be found here.

A.  Borrower/Lender Guidance for Preparation and Submission of PPP Loan Forgiveness Applications.

Some of the highpoints from the SBA/Treasury guidance is below:

  1. Loan Forgiveness Process.
  1. Furloughed Employees, Bonuses, and Hazard Pay.
  1. Caps on Loan Forgiveness for Owner-Employees and Self-Employed Individuals.
  1. Advanced Payments of Interest on Mortgage Obligations.
  1. Laid-Off Workers Who Decline Offers to Work.
      1. The borrower made a good faith, written offer to rehire such employee (or, if applicable, restore the reduced hours of such employee) during the covered period or the alternative payroll covered period;
      2. The offer was for the same salary or wages and the same number of hours as earned by such employee in the last pay period prior to the separation or reduction in hours;
      3. The offer was rejected by such employee;
      4. The borrower has maintained records documenting the offer and its rejection; and
      5. The borrower informed the applicable state unemployment insurance office of such employee’s rejected offer of reemployment within 30 days of the employee’s rejection of the offer.
  1. Restoration of Employee Salaries or Wages or FTE Employees by June 30, 2020.
  1. Employees Fired For Cause, Voluntary Resignations, or Voluntary Requests for Schedule Reductions.

B.  SBA Review Procedures.

Some of the highlights from the SBA/Treasury guidance is below:

  1. When will SBA Review a PPP Loan Forgiveness Application?
  1. Will I Have an Opportunity to Respond to SBA’s Questions in a Review?
  1. If SBA Determines that a Borrower is Ineligible for a PPP Loan, Can the Loan be Forgiven?
    • No.  If SBA determines that a borrower is ineligible for the PPP loan, SBA will direct the lender to deny the loan forgiveness application.  Further, if SBA determines that the borrower is ineligible for the loan amount or loan forgiveness amount claimed by the borrower, SBA will direct the lender to deny the loan forgiveness application in whole or in part.  SBA may also seek repayment of the outstanding PPP loan balance or pursue other available remedies.
  2. May a Borrower Appeal SBA’s Determination that the Borrower is Ineligible for a PPP Loan or Ineligible for the Loan Amount or the Loan Forgiveness Amount Claimed by the Borrower?

Business Tax Planning Lawyer

Need assistance in managing the business planning processes? Freeman Law advises clients with corporate and other entity formations and reorganizations. Restructuring entities—through conversions, mergers, and liquidations—can involve particularly complex tax and regulatory considerations. Freeman Law provides experienced tax and business counsel, helping our clients achieve their organizational goals in a tax-efficient manner. Schedule a consultation, or call (214) 984-3410 to discuss your corporate structuring or business and tax planning concerns.