Wink Inc.
Enrolled Agents
America’s Tax Experts
®
Wink Tax Services
Wink Inc. Enrolled Agents | 2701 Troy Center Dr, Ste 430 |
Troy | Michigan | 48084 | Tel: 248-816-1220 | TF: 800-276-8319
| Text: 248-800-6013 |
Paycheck Protection Program Flexibility
Act (PPPFA) of 2020 - H.R. 7010
Congress has passed the Paycheck Protection Program Flexibility Act
(PPPFA) of 2020, which makes substantial changes to the program and
was signed into law on June 5th 2020.:
•
The covered period has been extended from 8 weeks to 24 weeks
after the origination of the loan or December 31, 2020, whichever
occurs first, giving employers substantially more time to comply
with the forgiveness requirements and other terms of the loan. If
the loan was received before the enactment of the PPPFA, the
borrower may choose either the original 8-week period or the new
24-week/December 31, 2020 period.
•
Loan maturity has been increased from 2 years to a minimum of 5
years, giving borrowers a longer amount of time to pay back the
portion of the loan that is not forgiven. For loans finalized prior to
the PPPFA, the lender and borrower can agree to change to the
longer term.
•
Congress has rebutted the administration’s attempt to limit the uses
of the funds for other than payroll to no more than 25% of the
forgiveness. The Act instead requires at least 60% of the loan
proceeds to be used for payroll and up to 40% can be used for
business rent, mortgage interest (but not for pre-payment of the
interest or for payment of principal) and utility payments.
CAUTION: This means if less than 60% is used for payroll there will
be zero forgiveness.
•
To alleviate employers’ rehiring problems, the Act provides an
exemption for employers that are unable:
•
To rehire an employee who was working for the employer on
February 15, 2020,
•
To hire similarly qualified employees on or before December
31, 2020, or
•
To return to the same level of business activity as such
business was operating at before February 15, 2020, due to
compliance with requirements established or guidance issued
by the Secretary of Health and Human Services, the Director
of the Centers for Disease Control and Prevention, or the
Occupational Safety and Health Administration during the
period beginning on March 1, 2020, and ending December
31, 2020, related to the maintenance of standards for
sanitation, social distancing, or any other worker or customer
safety requirement related to COVID–19.
•
The deferral of payments of the PPP loan principal, interest and fees
that was originally 6 months to one year is changed by the Act to be
until the date the loan forgiveness amount is remitted to the bank
by the SBA.
•
The original rules of the CARES Act prevented employers who
received PPP loan forgiveness from being able to defer payment of
payroll tax, another provision of the CARES Act. The PPPFA changes
that rule to allow qualified employers to take advantage of deferring
2020 payroll tax payments even if they’ve received PPP loan
forgiveness. The deferral allows 50% of the eligible payroll taxes to
be deferred until December 31, 2021 and the balance to December
31, 2022. Taxes that can be deferred include the 6.2% employer
portion of the Social Security (OASDI) payroll tax, and the employer
and employee representative portion of Railroad Retirement taxes
(that are attributable to the employer’s 6.2% Social Security
(OASDI) tax rate), effective for wages paid March 27, 2020 through
December 31, 2020.
This will certainly require the SBA to revise the PPP loan
forgiveness application. If you have already reviewed the current
application, you are aware of just how complicated it is. Hopefully,
this will give the SBA additional time to work on simplifying the
application. If you have questions about how these changes might
apply to your situation, please give us a call.
Please call us at (248) 816-1220 or 800-276-8319 to set up a free
consultation.
Or Book Your Consultation here:
We service clients worldwide.