How The IRS Is Using The Tax Laws For PPP Loan Enforcement

Описание: How The IRS Is Using The Tax Laws For PPP Loan Enforcement

With allegations of widespread Paycheck Protection Program loan fraud, every law enforcement agency is trying to get involved. The IRS is getting involved as well. The IRS is using the tax laws to pursue potential PPP loan fraud.

As we've discussed, forgiven loans are generally taxable. Congress passed a law ensuring that PPP loans would be excepted from this general rule. As a result, PPP loans qualifying for forgiveness were not taxed. The IRS has recently taken the position that if a PPP loan was not truly eligible for forgiveness - for example, if the funds were not used for eligible expenses - then it does not qualify for income exclusion. What this means is that the PPP loan would be taxable income.

In an audit, the IRS can look into a taxpayer's eligibility for PPP loan forgiveness. If the IRS determines that there was an issue with the PPP loan or its forgiveness, the IRS can seek to impose tax on those loan funds and seek civil or criminal penalties.

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