“It is not like the tax code,” said Scott Kadrlik, a CPA and managing partner at Meuwissen, Flygare, Kadrlik & Associates in Eden Prairie, Minn. “Advisors are asked to answer questions there’s no guidance for.”
Lenders are also confused. Rhonda Gallion, a director in the risk and compliance practice of the consultancy Protiviti in Phoenix, whose clients are consumer and commercial lending institutions, said their concerns include how much forgiveness jeopardizes guarantee of loans and borrowers’ expectations about potential non-forgiven amounts, among others.
The U.S. House of Representatives has approved the Paycheck Protection Program Flexibility Act of 2020 (PPPFA) to provide PPP borrowers flexibility on how to use funds and more time to qualify to avoid repaying. The Senate planned to vote on the measure this week. The final bill might well include clarification regarding non-payroll costs, an extended period to pay back unforgiven amounts and the ability to use PPP and pandemic-related tax breaks, among other provisions, according to Robbin Caruso, CPA, CGMA and partner at Prager Metis.
The following are tips to help avoid PPP confusion:
• Borrowers should date-stamp evidence of eligibility should guidance change, Gallion said.
• “Documentation, documentation, documentation,” Kadrlik said. “Put together the support for each item claimed for forgiveness.”
• Use a loan-forgiveness calculator from an accounting firm, payroll service provider or the American Institute of CPAs, Becht said. He added that “it may not be in business owners’ best interest to be an early mover. Weigh the risk of holding onto some of the funds until more guidance is issued.”