In an unexpected turn of events, some businesses are receiving notifications to provide additional documentation for PPP loans that were already forgiven. This development brings to light the importance of being diligent and prepared, even after loan forgiveness has been granted.
- Re-examination of Loans: The SBA is initiating re-audits on loans previously forgiven, particularly from 2021 onwards.
- Verifying Legitimacy: Before responding to any requests for additional documentation, confirm the legitimacy of the inquiry with your bank to avoid falling prey to scams.
- Understanding Forgiveness Criteria: Ensure you understand the two-part analysis for establishing forgiveness based on original loan application data and how the funds were utilized.
The SBA’s Follow-Up:
It’s crucial to understand that the SBA has the authority to re-audit forgiven loans. These re-examinations are on the rise, and they can request further substantiation of the initial qualifications for the loan.
Double-Check the Forgiveness Formula:
Business owners must revisit the calculations that determined their loan amount and the eventual forgiveness. This means looking back at your 2019 payroll, employee benefits, and taxes to ensure that they align with the amount you were granted and, subsequently, the amount forgiven.
Respond Promptly and With Precision:
Delaying or ignoring requests for additional information could lead to the reversal of forgiveness and the initiation of collection procedures. Having a qualified CPA or tax attorney review your records before submission is not just recommended, it’s essential.
The Bottom Line:
Stay vigilant for communications from your bank and respond promptly. If you’re unsure or need assistance in dealing with these re-audits, don’t hesitate to reach out to Milikowsky Tax Law for expert advice and guidance.