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Intuit

Understanding your Tax Cost report for PPP Loan Forgiveness

Before you use the payroll data in this report as part of a Paycheck Protection Program (PPP) Loan Forgiveness Application, please read and understand the important information included here.

You will need to combine both Tax Costs and Cash Compensation amounts to determine the total Payroll Costs requested in your loan forgiveness application.

The tables in the Tax Cost report reflect certain employer state and local taxes assessed on compensation identified in your QuickBooks payroll account. The information we provide here includes the following:

  • How we identified and calculated the taxes in this report
  • The guidelines for interpreting and using the data in this report (including how it may be overinclusive and underinclusive of employer state and local taxes assessed on employee compensation eligible for PPP loan forgiveness)
  • Documentation required to be submitted with your PPP loan Forgiveness Application.

Borrowers must certify that the payroll costs claimed for forgiveness in their PPP Loan Forgiveness Application, including employer state and local taxes assessed on employee compensation, are eligible for forgiveness under the applicable guidance. 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 Application and to the latest guidance from SBA and Treasury to confirm the most current program rules.

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. 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) (described below).  Tax cost  is eligible for forgiveness if (1) paid in your LFCP (even if incurred before the LFCP), or (2) incurred, but not yet paid on paycheck transactions on or after the borrower’s LFCP or APCP start date and on or before the end date of the borrower’s LFCP or APCP or requested date of loan forgiveness if earlier than the end of their LFCP or APCP.

Your LFCP generally begins on the date you received your PPP funds (or if you received them on more than one date, the first date you received PPP funds). If you received your PPP loan proceeds from your lender on or after June 5, 2020, your LFCP is 24 weeks. However, if you received PPP loan funds before June 5, 2020, you can choose to use either an 8-week or 24-week LFCP.

If you’re a borrower with a biweekly or more frequent payroll schedule, you may choose an Alternative Payroll Covered Period (APCP) that aligns with your payroll cycle. The APCP begins on the first day of the first pay period following receipt of your PPP funds. If you choose this alternative period, it applies only to, and must be used for, payroll costs (including cash compensation and tax cost) and certain required reductions in your PPP Loan Forgiveness Application.

If the covered period you choose extends beyond your history with QuickBooks Payroll, you’ll need to provide some additional payroll information to complete your forgiveness application. Your LFCP or APCP, if applicable, must end no later than December 31, 2020.

Tax Costs identified in this report

This report contains 4 tables:

  • Total Employer taxes (table 1): This Table lists the total employer state and local taxes assessed on compensation that were paid or incurred within your LFCP or ACPC.
  • Tax payments dated within the covered period (table 2): This table lists tax payments dated within your LFCP or ACPC. Payroll customers who use electronic payments, this date is the payment date of tax liabilities as recorded by Intuit’s automated electronic tax payment process.  Otherwise, the payment date is the date recorded by the employer in Intuit’s online payroll.”
  • Taxes incurred during the covered period (table 3): This table lists taxes incurred but not yet paid on payroll transactions within your LFCP or ACPC.
  • Prorated tax incurred during the covered period (table 4): This table lists taxes partially incurred but not paid within your LFCP or ACPC.

    To estimate the incurred prorated tax cost in your covered period, we divide by the number of days in the pay period, and multiply by the number of days in the pay period that fall in the LFCP or ACPC. Proration method: 

    ((Total tax cost/days in the payroll period)*days of the pay period that fall on or before the end of the borrower’s LFCP/APCP))
.

Employer Taxes eligible for forgiveness

Employer state and local taxes paid or incurred on the compensation of employees who were employed by the borrower at any point during the LFCP or APCP and whose principal place of residence is in the United States can be considered for forgiveness.

Employer Taxes not eligible for forgiveness

  • Employer and employee taxes assessed on wages designated under the Families First Coronavirus Response Act (FFCRA) 
  • Taxes withheld from employees are not eligible for forgiveness.
  • Taxes assessed on wages paid to employees whose address is outside the United States are not eligible for forgiveness

State and local taxes assessed on self-employed schedule C or schedule F fillers. QuickBooks does not have a designation for different types of owner employees, so this report also may include state and local taxes assessed on the compensation of Schedule C/F filers and general partners.  You must review for and exclude any taxes assessed on the compensation of Schedule C/F filers and general partners. See additional information here.

Documentation requirements

Please review the PPP Loan Forgiveness Application Instructions published by the SBA to review the list of documents that each borrower must submit and/or retain in connection with a PPP Loan Forgiveness Application. 

If borrowers qualify to use SBA Form 3508EZ PPP Forgiveness Application, certain documentation requirements may differ.  Documentation requirements for Form 3508EZ are available here.

With regard to payroll costs for which forgiveness is sought, borrowers must provide documentation verifying payment of eligible cash compensation and non-cash benefits.

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