COVID-19 & TAXES UPDATE April 20th

COVID-19 & TAXES UPDATE April 20th

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Many of you have asked numerous great questions about the requirements for the number of employees and their pay rates after you receive your PPP loan proceeds. There are a couple of questions, which keep cropping up so we think it beneficial to cover it here.  The situation is that many of you have already reduced your overall workforce due to decreased business operations.  However, the forgiveness rules of the PPP loan require that your total employee numbers after you receive the loan must be equivalent to your total employee numbers during the first two months of 2020.

First, if you reduced your workforce prior to receiving your PPP loan, that does not affect your potential loan forgiveness.  The requirement is that you increase your workforce back up to pre-loan figures after you get the loan.  This does not have to be immediate.  You have until June 30 to do this so you can start hiring back employees that you previously laid off or furloughed.  Our advice is that you do so sooner rather than later because it is only the loan proceeds spent on payroll, rent, and utilities in the eight weeks following loan funding that qualifies for forgiveness.  Thus, if you wait until June 30th to increase your employee numbers, you may not be able to spend the loan proceeds completely and unspent amounts must be repaid.

Second, many of you believe that the employees you previously laid off may not want to return to work because of the enhanced unemployment benefits they may be receiving.  Although this is logical, it is not necessarily legal for the employee to do this.  If an employee is offered their job back and refuses to return to work, they may not qualify for unemployment benefits anymore.  According to Wyoming Department of Workforce Services, persons on unemployment must return to work if a job is offered.  The Wyoming Department of Workforce Services explains this on their website here: http://www.wyomingworkforce.org/news/2020-04-16/.  If you as an employer run into this kind of fraudulent activity, you can and should report it to the State as discussed on their website. 

As additional guidance is forthcoming, we will provide it to you.  Remember to visit our blog page at www.cpawyo.com for updates.  It is impossible to anticipate every question via our email posts, so please call with your individual questions so we can go over them.  Thanks, and be healthy!

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