Understanding your Tax Cost report for PPP Loan Forgiveness

The Tax Cost report for PPP Loan Forgiveness reflects certain employer state and local taxes assessed on compensation identified in your QuickBooks payroll account, based on the time period you select.

Before you use the data in this report in connection with a Paycheck Protection Program (PPP) Loan Forgiveness Application, make sure to read and understand the important information below regarding how we identified the taxes on this report, how it may include amounts that are not eligible for PPP loan forgiveness, and what adjustments you should make when applying for forgiveness. 

Before applying for PPP loan forgiveness, you must review this report and determine whether it includes tax cost amounts that are not eligible for forgiveness.   Learn more about PPP loan forgiveness, including which tax costs are eligible for forgiveness.

Borrowers will be asked to certify that the costs claimed for forgiveness in their PPP Loan Forgiveness Application are eligible for forgiveness.

Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly. Please refer to the PPP Loan Forgiveness Applications, Application Instructions, and the latest guidance from SBA and Treasury to confirm the most current program rules regarding which payroll taxes are eligible for forgiveness and how they apply to your particular situation.

Time period used for this report

The Tax cost report for PPP Loan Forgiveness uses the time period you select for purposes of your PPP Loan Forgiveness Application (“selected period”). You should select a time period consistent with the SBA’s guidance on payroll costs eligible for forgiveness.

Each borrower has a Loan Forgiveness Covered Period (LFCP).  State and local payroll taxes are eligible for forgiveness if (1) paid in your LFCP (even if incurred before the LFCP), or (2) incurred in the last pay period of your LFCP and paid by the next regular payroll date. Costs incurred after your LFCP won’t be forgiven.

Your LFCP generally begins on the date when you received your loan proceeds from the lender.  Your LFCP may end on any date you choose between 8 and 24 weeks after your LFCP start date. 

Tax Costs identified in this report

This report contains 4 tables:

• Total Employer taxes
• Tax payments dated within the covered period
• Taxes incurred during the covered period
• Prorated tax incurred during the covered period

Total Employer taxes (table 1): This Table adds up the total employer state and local taxes identified on tables 2, 3, and 4. See a list of Employer Assessed Taxes included in this report.

Tax payments dated within the selected period (table 2): This table lists tax payments dated within your selected period as identified in your QB Payroll account. For customers without tax payment e-services enabled, amounts listed as “paid” in this report are those manually entered by the borrower as having been paid in Intuit’s online payroll product. For e-services enabled customers, amounts listed as “paid” are those recorded by Intuit’s automated electronic tax payment process. This table includes all payroll-related taxes paid to the relevant state or local jurisdiction for employees and, if applicable, owners (i.e., owner employees, general partners, self-employeds).   

Taxes incurred during the selected period (table 3): This table lists taxes incurred during pay periods falling completely within your selected period but not paid in the selected period. This table includes all payroll-related taxes owed to the relevant state or local jurisdiction for employees, and if applicable owners, who have a US address recorded in QuickBooks, except to the extent you have identified such taxes as associated with (1) qualified sick and family leave wages covered by the Families First Coronavirus Response Act (FFCRA) or (2) wages paid to retain employees under the Employee Retention Credit provided for in (a) section 2301 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (as amended), or (b) section 3134 of the Internal Revenue Code (as added by the American Rescue Plan Act of 2021).

Prorated tax incurred during the selected period (table 4): This table lists taxes incurred during pay periods that fall partially within your selected period but not paid in the selected period. This table includes all payroll-related taxes owed to the relevant state or local jurisdiction for employees, and if applicable owners, who have a US address recorded in QuickBooks, except to the extent you have identified such taxes as associated with (1) qualified sick and family leave wages covered by the Families First Coronavirus Response Act (FFCRA) or (2) wages paid to retain employees under the Employee Retention Credit provided for in section 2301 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (as amended), or section 3134 of the Internal Revenue Code (as added by the American Rescue Plan Act of 2021).

To estimate the tax cost incurred in your selected period during pay periods that fall partially in your selected period, we prorate as follows:

Proration method:

((Total tax cost/days in the payroll period (including weekends and holidays))*days of the pay period that fall on or before the end of the borrower’s selected period))

Guidelines for Interpreting and Using This Report

To comply with SBA certification requirements and other rules, borrowers must ensure that the payroll costs claimed in their PPP Loan Forgiveness Application, including employer state and local taxes assessed on employee compensation, are eligible for forgiveness, that those costs were used to retain employees, and that they have verified the payments. As noted above, this report may include tax amounts that are not eligible for forgiveness.

This report may contain taxes were neither (1) paid in the LFCP, nor (2) incurred in the LFCP and paid by the next regular payroll date following the LFCP, and thus are ineligible for forgiveness. You must review for and exclude from your forgiveness application payroll taxes that were not paid in your LFCP or incurred in the last pay period of your LFCP and paid by the next payroll date. As noted above, amounts in tables 3 and 4 were included without regard to payment date. You will also need to determine whether the proration methodology used in the report produces an accurate result for your business. 

This report may also contain categories of taxes that are ineligible for forgiveness, including taxes assessed on compensation paid to Schedule C/F filers or partners, taxes assessed on persons whose principal place of residence is not in the US, taxes assessed on individual employee compensation in excess of $100,000 as prorated for your LFCP, and taxes assessed on owner-employee compensation in excess of the caps available to owner-employees. In addition, the report may include taxes assessed on qualified sick and family leave wages or wage equivalents covered by the FFCRA, and wages that may be eligible for the Employee Retention Credits provided for in (1) section 2301 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (as amended), or (2) section 3134 of the Internal Revenue Code (as added by the American Rescue Plan Act of 2021), both in the paid taxes included on the report and, to the extent you have not identified them as such in your QB Payroll account, in the incurred taxes included on this report. Wages may be the basis for one of the above discussed FFCRA or employee retention credits or PPP forgiveness but not both. Taxes assessed on wages or wage equivalents for which you claim either a credit under the FFCRA or one of the employee retention credits mentioned above are not eligible for forgiveness. You must review the report for and exclude amounts from your forgiveness application that are ineligible for loan forgiveness, including because they reflect taxes assessed on wages you wish to use for employee retention credits or the FFCRA credit rather than loan forgiveness.

If your LFCP extends beyond your history with QuickBooks Payroll, you’ll need to provide some additional tax cost information to complete your forgiveness application.  

QuickBooks has provided this report to assist borrowers applying for forgiveness of their PPP loans. This report should not be considered financial, legal, accounting or other advice, or a substitute for obtaining advice specific to your business. 

Your actual forgiveness amount will be determined by your lender following rules set by SBA and Treasury.

Documentation requirements

Borrowers may need to provide certain forms of documentation verifying payment of payroll costs, including eligible taxes.  Please review the SBA’s PPP Loan Forgiveness Application and Instructions, depending on which application you are submitting, to understand the list of documents that each borrower must submit and/or retain in connection with a PPP Loan Forgiveness Application. 

Please also consult with your lender to understand any additional documentation your lender may require.