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SBA Releases Additional Paycheck Protection Program FAQs

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The Small Business Association (SBA) has released additional frequently asked questions about the Paycheck Protection Program (PPP).

The FAQs are available on the U.S. Treasury website and clarify the following:

  1. The $100,000 limit in the payroll cost computation only applies to compensation. It does not apply to health insurance, retirement benefits, or state and local taxes assessed on income.
  2. Borrowers are responsible for the accuracy of their average monthly payroll cost calculation. Lenders have only a “good faith review” requirement.
  3. Employee FICA/Medicare tax and federal income tax withheld are not to be subtracted from gross wages when arriving at the average monthly payroll cost calculation or the loan forgiveness payroll cost calculation. However, the employer share of FICA/Medicare is not includable in the payroll cost calculation.
  4. The time for computing headcount for loan eligibility is a 12-month average that matches the 12-month period used for the average monthly payroll cost calculation.

The FAQs make it clear that borrowers will only be responsible for following the rules in place at the time they made their application.

Please contact us at info@capincrouse.com with any questions.

Ted Batson

Ted serves as partner, tax counsel, and Professional Practice Leader – Tax. As a certified public accountant and tax counsel, Ted advises exempt organizations of all sizes on a wide range of issues. This includes consulting on tax and employee benefit related matters, representation before state and federal tax authorities, and assistance with firm audit or advisory engagements to formulate advice and counsel on important operating and tax issues. Ted also leads the firm’s tax preparation practice, including IRS Forms 990 and 990-T and related state forms.

4 Comments

  • John D says:

    When will we know if housing allowance is being considered as part of the total compensation amount? Assuming the individual clergy has not opted out of the Social Services program, they pay self-employment tax on their total comp (less expenses) so how is this not considered compensation from the church.

    • Amy Bucklin says:

      John,

      Thank you for your question. I’ve passed it along to our nonprofit tax team and we’ll get back to you with a response.

  • Robert Scott says:

    Good afternoon if we have contractors not employees how do this apply to our Church?

    • Amy Bucklin says:

      Robert, I passed your question along to our Nonprofit Tax team and they said:

      Employers cannot add in independent contractor compensation when computing the maximum amount of the Paycheck Protection Program loan. Further, employers cannot apply proceeds from a PPP loan to compensation for independent contractors. Independent contractors may, however, apply for a PPP loan on their own if they choose.

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