New Treasury Release on Payroll Tax

COVID-19
New Treasury releases

 The treasury department recently released additional information on the payroll tax. 

Payroll Costs
 
We previously wrote that Federal Taxes were not included in payroll tax.  The treasury department released more information.  Amounts excluded from the payroll calculation per the rules:
 
2(g)iii. Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees;
 
This means an applicant using the 12 months of payroll costs prior to February 15th can include FICA costs in the calculation for the amount of the loan.  Any payroll after February 15th will not be able to include FICA
 

Loan Forgiveness
 
The Cares Act clarified and added that at least 75% of loan proceeds must be used for payroll costs.  If a borrower does not use 75% of the proceeds for wages, they will be subject to penalties.  Companies may need to consider rehiring people so that they are sure they meet the 75% rule.
 
Per the Treasury release:
 
2s. What happens if PPP loan funds are misused? If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.