Maeda Palius
on
December 8, 2021

RE: CALIFORNIA PPP FORGIVENESS NON-CONFORMITY. . . AGAIN

To Our Valued Clients and Friends,

In April 2021, we communicated regarding changes to California conformity as it applied to Federal loan forgiveness treatment on PPP loans. We interpreted that the new California guidance applied to both first and second round PPP loans as covered loans, and therefore they were both eligible for favorable tax treatment.

WHAT HAS CHANGED?
A recent update to the California Franchise Tax Board website indicates that California’s law does NOT conform to the Federal Paycheck Protection Program Extension Act that extended the covered period of the PPP. As such, the law does not allow for an exclusion from income for PPP loans received after March 31, 2021.

WHAT DOES THIS MEAN?
If you received either a first or second round PPP loan after March 31, 2021, the forgiveness of that loan will be taxable on your California income tax return. Depending on the size of the loan, you may need to pay additional amounts for your 2021 California estimated taxes to account for this income increase.

If you have any questions or concerns, please do not hesitate to contact us.

Wishing You a Happy and Healthy Holiday
Maeda Palius, Jason Janzen, Annika Jensen and the POJ Team

Related Posts

  • Do Estimated Tax Payments Increase the Chance of Receiving a

    To Our Valued Clients and Friends, In recent years we have noticed an uptick in IRS and FTB notices. The #1 cause of these notices are incorrect estimated tax payment amounts being reported on individual taxpayer returns.

  • 2016 Year-End Tax Planning for Businesses

    Although tax planning is a 12-month activity, year-end is traditionally the time to review tax strategies from the past and to revise them for the future. Year-end has also become a time when there is an increasing need to take a careful look at what has changed within the tax law itself since the beginning…

  • The IRS requires 1096 and 1099 to be issued. No

    Every person engaged in a trade or business, including partnerships and nonprofit organizations, must file information returns for each calendar year for certain payments made during such year in the course of the payor’s trade or business. The IRS requires 1096 and 1099 to be issued.