Employers Returning PPP Funds Qualify for the Employer Retention Credit

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The Treasury issued new guidance on May 5, 2020, regarding an employer’s ability to qualify as for the Employee Retention Credit (ERC) in the event that an employer/borrower of a PPP loan elects to return the borrowed funds prior to May 14, 2020, extended deadline. The new guidance was issued as FAQ #80 of the IRS Employee Retention Credit FAQs resource.

FAQ #80 clarifies that for purposes of the ERC, an employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline will be treated as though the employer had not received a covered loan. Therefore, the employer will be eligible for the credit if the employer is otherwise an Eligible Employer.

As explained in a prior post, employers who were able to avail themselves of a PPP loan were not able to take advantage of the Employee Retention Credit as well. The new FAQ simply confirms that applying employers who did receive a PPP loan, but have elected to return it, can now claim the Employee Retention Credit offered by the CARES Act.

For questions or comments, please contact Bob Grossman or Don Johnston or your GYF Executive at 412-338-9300.

Related Posts:

Further SBA Guidance Extends Safe Harbor Deadline for PPP Loans

Paycheck Protection Program Loans – Round 2

FAQs Issued to Further Clarify Guidance on PPP Loans

IRS Releases Guidance on Employee Retention Credit

Paycheck Protection Program Loans (PPP) Available Under the CARES Act

Bob Grossman

Bob Grossman

Bob, one of the firm’s founding partners, has over 40 years of experience in public accounting. He specializes in tax and valuation issues that affect businesses as well as their stakeholders and owners. Bob has extensive experience working with the Internal Revenue Services and also serves as an expert witness in litigation matters.

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