To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. 80, largely conforming to Federal rules relating to deductibility of expenses paid with funds from forgiven Paycheck Protection Program. ZmEwMjJhMjJhYSJ9 California close to making PPP loans tax deductible California Conforms to Federal PPP Loan Forgiveness Rules CalFresh Student Outreach and Application Assistance. ZTg2N2Y3NGIyZGIwODA1ODY4OWI3ZDYzNWNjOTk5OTUyZmU4YTllMzc2OTVj 21-17) does not apply to either first- or second-draw loans received after March 31, 2021. ZjM4OTJmMjgzYWNmN2I1NzQzMDI5YzFkNDg0ZGEwZGY0Zjk4ZTVmOTczYzhi YWFjZWQ2YzBhMWI1ZWY2ZDgwYmYxYzVmNDY5OTYxYTNkOTUyMTJlNzk0YTZk 200 West Roseburg Avenue Modesto, CA 95350 (209) 527-4220 (phone) (209) 527-4247 (fax) https . 9 For additional details relating to the federal Flexibility Act, please refer to the Deloitte Tax News & Views Capitol Hill Briefing, dated June 12, 2020 (available here). Podcast: Should borrowers submit PPP loan forgiveness applications early? A.B. 250 0 obj <>stream On June 30, 2022, AB 194 was enacted which allowed an income exclusion for covered loan amounts forgiven pursuant to the Paycheck Protection Program Extension Act of 2021 (PPPEA)(Public Law 117-6). 1577, 2019-2020 REG. Businesses allege Bank of America pressured them to take out bigger PPP California Rebuilding Fund Small businesses may be eligible for a loan up to $100,000 from the California Rebuilding Fund. Mr. Grossman specializes as a subject matter expert in California Corporation Income or Franchise Tax matters. Generated by Wordfence at Sat, 4 Mar 2023 17:56:39 GMT.Your computer's time: document.write(new Date().toUTCString());. See how. 0 He has 22 years of broad-based SALT consulting experience at the national and practice office levels in large public accounting firms. Forms, publications, and all applications, such as your MyFTB account, cannot be translated using this Google translation application tool. 1577 adds two identical California tax provisionsCalifornia Revenue & Taxation Code (CRTC) section 17131.8 under the Personal Income Tax Law (PITL) and CRTC section 24308.6 under the Corporation Tax Law (CTL). Emergency Financial Relief to Support Community College Students. California businesses have been down to the wire this tax season, up against paying state taxes on their Paycheck Protection Program loans. SESS. L. No. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Credit: Spidell Tax, Analysis, and Education, 200 West Roseburg Avenue Spidell Publishing - one of California's leading continuing education organizations - is reporting that the PPP loan forgiveness exclusion enacted by AB 80 (Ch. We do not control the destination site and cannot accept any responsibility for its contents, links, or offers. Payroll Protection Program (PPP) loans have been a lifeline to businesses since the onset of COVID-19. 4 See P.L. 116-136. The authors of this alert would like to acknowledge the contributions of Lauren Kim to the drafting process. PPP Forgiveness: Urgent News About Nonconformity in California, Key Tax Credits Have Expired: What This Could Mean for You, 79245 Corporate Centre Drive, La Quinta, CA 92253. Do not include Social Security numbers or any personal or confidential information. On April 29, 2021, California Gov. %%EOF On April 29, California Gov. How does ESG fit into business strategy? There has been no activity, and we can't get good information on when and if it will pass, and what will actually be included in the final bill. Social login not available on Microsoft Edge browser at this time. California PPP Update 4.26.2021 : taxpros - reddit This message will not be visible when page is activated. 80 amends California law to operate more consistently with the federal CAA regarding the permissibility of deductions for expenses paid with forgiven PPP loan proceeds. 276 0 obj <> endobj 1577, 1, 2; CALIFORNIA ASSEMBLY FLOOR ANALYSIS, AUG. 29, 2020, INCOME TAXES: FEDERAL CARES ACT: GROSS INCOME: LOAN FORGIVENESS, JULY 8, 2020, Deloitte Heads Up, Volume 27, Issue 8, Highlights of the CARES Act, updated September 18, 2020, Deloitte Tax LLP's Multistate Tax practice, California legislature allows certain non- MjhlMTk5ZGY1MzFiNTZlYzQ5N2ZlMTAyOGIwYzZhZDAwOGU4ZDQ5N2U4Nzlj By: Pedro T. Rincon, CVA, Partner Osborne Rincon CPAs. 80 amends California law to operate more consistently with the federal CAA regarding the permissibility of deductions for expenses paid with forgiven PPP loan proceeds. Shortly after enactment of the CARES Act, the Internal Revenue Service (IRS) issued Notice 2020-32 providing that deductions for business expenses otherwise allowable under the Internal Revenue Code (IRC) (e.g., deductions under IRC Secs. CODE 17131.8(b); 24308.6(b), as added by A.B. You will then receive an email that helps you regain access. 1577, 2019-2020 REG. Gavin Newsom signed Assembly Bill 80 (A.B. 1577, 1-3 (stating that [t]his act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect). YjFhOWM4Y2FkNDM3NWJjM2ZmZjE2YmFmNjhlNjc3MDJjM2Q3NjJhMmE1NDgz N2QwYTc0NzQ2ZDg0NGM3YzhhYTM2YWM5N2IwZWUzODM5NzI2OTlkODM5M2Q5 Find out how the technology, banking and asset management sectors are adapting their strategies to handle todays threats. Taxpayers must have a 25% reduction in gross receipts in any 2020 calendar quarter as compared to the comparable 2019 calendar quarter in order to deduct expenses paid with PPP loan forgiven amounts. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. An additional $310 billion of PPP loan funding was subsequently provided by the federal Paycheck Protection Program and Health Care Enhancement Act (P.L. Partner, State and Local Tax West Region Leader. California Conforms to Federal PPP Loan Forgiveness Rules 17 (A.B. x000K@4CgCGt@1: L%v5Fo- j-YW v We cannot guarantee the accuracy of this translation and shall not be liable for any inaccurate information or changes in the page layout resulting from the translation application tool. All rights reserved. The agreement also provides $20 million to reengage students who have either left their community college studies because of the pandemic or to engage students at risk of leaving. Connecting with our core purpose through a renewed lens. California taxpayers canalsofully deduct expenses paid with EIDL fundssince this thresholddoes not apply toEIDL grants. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. On Sept. 9, 2020, which was after the IRS released Notice 2020-32 but before the CAA was signed, California enacted legislation, A.B. Podcast: Critical new considerations for September 15 estimated tax payments. You must pay it back within either 3 or 5 years. Principal, SALT Services Matt Tierney and Andre Bourgon from Grant Thornton discuss how to execute a winning ecosystem strategy to manage insurance companies. California's partial PPP conformity bill sent to Governor (04-26-21) The California General Assembly has sent AB 80 to the Governor, and he is expected to sign it. The California Franchise Tax Board (FTB) plans to issueguidanceexplainingqualification and other requirements with respect to AB 80, and it is expected to include guidance for taxpayers that have already filed 2020 California individual or corporate tax returns. View the list of archivedMultistate Tax alerts. SBA Forgiveness Portal. Grant Thornton LLP is a member firm of GTIL. However, California disallows a credit or deduction for Loan Forgiveness Eligible Expenses to the extent of the Forgiven Loan Amount. Lauren is a senior associate working in the Washington National Tax practice of Deloitte Tax LLP. Drive maximum value across your supply chain. If you have any issues or technical problems, contact that site for assistance. Yjk1NTlhZjUzMmI3ODFlN2VlZDM3OWQ5OWM1ZDgzYmM3NTgyMWVkZjViZTQy If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Overview. Further, AB 1577 applied only to tax years beginning on or after January 1, 2020. We understand you. California law excludes PPP loans forgiven under the CARES Act from gross income, Telecommunications, Media & Entertainment, Background on federal legislation relating to the PPP, Overview of notable changes under A.B. Notice 2020-32 (available here). Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. Taxpayers that have received PPP loans should consult with their California tax advisors regarding the changes made by A.B. 162 and 163) will be disallowed to the extent PPP loan proceeds are ultimately forgiven.5 Later in 2020, the IRS issued Revenue Ruling 2020-27 further explaining that taxpayers cannot deduct expenses paid with PPP loan proceeds if the taxpayer reasonably expects forgiveness of the covered loan regardless of the year when forgiveness occurs. Under the express terms of the CARES Act, forgiven loan amounts are excluded from the borrowers gross income.4 13 See I.R.C. . M2EzM2JjMzhiMzQ0OGJhZjM2Y2YwYzkiLCJzaWduYXR1cmUiOiIzZWNjNmEy hbbd``b`?`\@ "$@b Bq@S my S{.$4VP&F% 1FrO G The American Rescue Plan Act (ARPA) (Public Law 117-2) was enacted on March 11, 2021. 1577), Laws 2020. People are having a hard time making ends meet. You can count on us to prioritize and complete work to the best of our ability based on these changes. Modesto, CA 95350, (209) 527-4220 (phone) There have been a few different rounds of applications, and of course, the program is complex as businesses must be fully clear about inclusion/exclusions and how forgiveness and/or repayment terms work. For a complete listing of the FTBs official Spanish pages, visit La esta pagina en Espanol (Spanish home page). PDF Rev. Rul. 2020-27 ISSUE - IRS Otherwise . The new legislation supersedes AB 1577. endstream endobj 277 0 obj <. Energy companies can get ahead with fiscal discipline, ESG disclosure preparation and attention to cybersecurity, 2022 Energy Symposium speakers say. The path to quality loyalty programs begins with adopting the right analytics looking deeper into customer purchase patterns to uncover true trends. The 25% gross receipts limitation does not apply to the EIDL advance grants, so taxpayers may exclude the EIDL grants and may fully deduct these expenses even if they dont meet the threshold reduction. A custom solution allowing banks and their customers to calculate SBA PPP loan amounts based on unique business characteristics. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year. PPP Loan Forgiveness for Borrowers International China Practice India Practice Latin America Practice Consulting Technology Risk & IT Compliance Strategy & Operations Transactions Specialty Technology Automation Data Analytics & BI Development & Integration Enterprise Systems Technology Products Technology Strategy Automation SACRAMENTO Governor Gavin Newsom, Senate President pro Tempore Toni G. Atkins and Assembly Speaker Anthony Rendon today announced that they have reached an agreement on a package of immediate actions that will speed needed relief to individuals, families and businesses suffering the most significant economic hardship from the COVID-19 Recession. A.B. However, they were amended to apply to taxable years beginning on or after January 1, 2019. COVID-19 has caused PE firms to adjust their valuation practices postponing valuations to avoid reset triggers, exploring new approaches to valuations or diversifying existing ones. The new legislation supersedes AB 1577. How we work matters as much as what we do. We strive to provide a website that is easy to use and understand. OTFhMGFmZGQ0YThjYTRlMDNjYWE5NDNlMmI2NjY2ZTFiYTdmNzc0NGFjM2Zj 117-6). 636(a)(37)(A)(iv)(I)(bb) was added by Section 311 of Division N of the CAA. On July 4, 2020, Public Law 116-147 extended the authority to guarantee PPP loans to August 8, 2020. Read about the challenges and opportunities that could lie ahead. 80 provides much needed guidance clarifying Californias treatment of deductions for expenses paid with forgiven PPP loan proceeds. Credit: Spidell Tax, Analysis, and Education Go Back Print. When addressing the new expectations of your workforce, speed is a key factor. More than 750,000 PPP loans were taken out by California small businesses. Illinois Governor J.B. Pritzker signed new legislation (P.A. The agreement also partially conforms California tax law to new federal tax treatment for loans provided through the Paycheck Protection Plan, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. Who should lead the charge? 1577) into law. I have already received forgiveness on my second draw, which was thankfully from a different lender, therefore reason 2 of why I was denied is invalid. 13 Specifically, A.B. If youd like to discuss tax implications that may be facing your business, contact Osborne Rincon at (760) 777-9805. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. This box/component contains JavaScript that is needed on this page. The agreement provides an additional $24 million for financial assistance and services through Housing for the Harvest a program providing support for agricultural workers who have to quarantine due to COVID-19. This content supports Grant Thornton LLPs marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. 80s partial conformity to the federal treatment of expenses paid with forgiven PPP loan proceeds is welcome news that generally alleviates an otherwise burdensome federal conformity issue. YjNiOTAxNmNjNzdiZTlhZGIxNjNmYmViOWVmYThmZWI3YTRmMzM0ZmZiNjBj 1 A.B. 1577. On September 9, 2020, California's Governor Newsom signed Assembly Bill 1577 (A.B. The agreement also provides a combined $35 million for food banks and diapers. Governor Gavin Newsom has signed Assembly Bill 80, to amend the law. NDQyOTJlYTVmOTZkMzNjMTFiNDZlY2VjNjdlMmViOTViNWVlZmRkMzIyZWNl NTU5M2RhOWQwZTM1ZWU5NWE0YmI3YmJjZjMyYWI4M2IxYzcyNDVkMjY1MDc0 80 has been satisfied to avoid being classified as an ineligible entity.. Find out how to manage the business risks behind data. Executives are advised to pay special attention to emerging trends that will shape how boards and investors talk about ESG in 2021. 1577, 1, 2; CALIFORNIA ASSEMBLY FLOOR ANALYSIS, AUG. 29, 2020 (available here); see also Coronavirus Aid, Relief, and Economic Security Act, Pub. 80), Laws 2021. To qualify for expense deductions, basis adjustments, and lack of reduction of tax attributes related to an SOV grant under SB 113, you must meet the following qualifications. ODE0ZjA1OTZlMmYzNGViM2E4NWJiYTMwNzQ0N2I2YmVhZTE1MDVlNWJjOTJk Our response tackles the human and the economic impacts of COVID in a way that echoes President Bidens American Rescue Plan and will help those who are hurting most. Osborne Rincon CPAs | 79245 Corporate Centre Drive, La Quinta, CA 92253 | 760-777-9805 | Copyright 2018 Osborne Rincon. California taxpayers that have received PPP loans or EIDL advance grants will likely want to consider the new law when filing their 2020 California corporate and individual income tax returns. OTc5MjdiOWVmNjcwMzYzYTRjZjhmOWI1YmQzZDczMDNkYzZmYjk2Mzk2ZWJi Unable to verify your submitted forgiveness amount and/or documents or 2.) Paycheck Protection Program Loan Forgiveness and Treatment - California 1577, 2019-2020 REG. 6 See CALIFORNIA SENATE COMMITTEE ON GOVERNANCE AND FINANCE ANALYSIS, JULY 24, 2020 (available here); CALIFORNIA ASSEMBLY FLOOR ANALYSIS, AUG. 29, 2020. 10 CAL. For taxpayers other than ineligible entities, A.B. If your PPP amount is over $150, 000 and you received your PPP loan through a bank in the SmartBiz network, your bank will be contacting you directly about applying for Forgiveness. REV. 1557 also disallows otherwise allowable credits and deductions for amounts paid or incurred using forgiven loan funds.3 Because California generally conforms to the version of the Internal Revenue Code (IRC) that existed as of January 1, 2015, California did not automatically conform to the CARES Act and subsequent, related federal legislation.4 Absent conformity, the California Legislature anticipated that California businesses could have to pay more than $3 billion in additional taxes attributable to forgiven PPP loans.5 As a result, the California Legislature enacted A.B. This is alyx our streamlined concierge-enabled platform that connects real problems with the right resources and real solutions. On April 29, 2021 Governor Newsom signed California A.B. California has NOT passed AB 80: the PPP forgiveness bill March 9, 2021 AB 80, the bill that would allow up to $150,000 of expenses to be deducted if paid with PPP forgiven loan amounts has not yet passed.