The Internal Revenue Service noted this week proceeds from loans under the Paycheck Protection Program are taxablei if they are improperly forgiven . The IRS issued the guidance recently dealing with forgiveness based on taxpayer misrepresentations or omissions.The agency said taxpayers must include the portion of loan proceeds that was forgiven based on these problems in income. It encouraged those to whom this guidance applies to file amended returns.
The IRS noted the criterion that recipients must meet to have proceeds excluded from income. These include the requirements the recipient was a small business concern, independent contractor, eligible self-employed individual, sole proprietor, business concern, or a certain type of tax-exempt entity that was in business on or before Feb. 15, 2020 and had employees or independent contractors who were paid for their services, or was a self-employed individual, sole proprietor or independent contractor.
Proceeds must have been used to pay eligible expenses, such as payroll, rent, interest on the business' mortgage, and utilities and the loan recipient needed to apply for forgiveness.
The IRS asks those with information about tax-related should submit Form 3949-A, Information Referral.
