Treasury updates “good faith certification” guidance – new, FAQ 46 and Washington DOR loan forgiveness reporting on B&O returns

Two bits of good news for businesses affected by COVID: 

1.  New Treasury guidance on loan certifications.  The Treasury just released a new FAQ, stating the loan amounts below $2 million will be deemed to have the certification regarding need for Paycheck Protection Program (PPP) loans to have been made in good faith.  Here is an excerpt:

FAQ 46 – Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. [footnote omitted]

The complete updated guidance can be found at: Paycheck Protection Program Loans

2. Washington DOR says – don’t report federal loan forgiveness as income for B&O, until further notice.  The Department of Revenue recently posted guidance for Washington businesses who receive federal loan forgiveness under PPP and similar programs.  From DOR’s website:

“The department has determined that businesses receiving assistance under these federal programs (including the federal Paycheck Protection Program (PPP) program) should not report assistance as gross receipts for B&O tax purposes and should not pay B&O tax on that assistance at the present time.”

The department believes that there may be interest in clarifying the applicable statutes, especially after the various programs at issue have been identified and analyzed more thoroughly. Therefore, the department will delay any final decision on taxability or enforcement actions until after the Legislature has had an opportunity to act. In the meantime, no penalties or interest will accrue with regard to any tax that may be due on such receipts until further notice.

For more information:  Federal Finance Assistance Regarding COVID-19

If your business needs help navigating the COVID-19 crisis or planning for employees’ return to the office, PRK Livengood attorneys are here to help.  Please contact John J. White for more information.