The IRS recently issued guidance addressing improper forgiveness of a Paycheck Protection Program loan (PPP loan).
The guidance confirms that when a taxpayer's loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiveness from income and must include in income the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions.
Taxpayers who inappropriately received forgiveness of their PPP loans are encouraged to comply by, for example, filing amended returns that include forgiven loan proceed amounts in income.
Thanks to Megan Murray of Berg Partners for sharing this critical information.