Tag Archive for: ppp loan

SBA PPP Loan Paperwork

The Small Business Administration (SBA) has forgiven over 98% of the total Paycheck Protection Program (PPP) loan value that borrowers requested them to forgive; recently, however, SBA has begun to issue more forgiveness PPP loan forgiveness denials.

Many of these recent denials issued by the SBA are not consistent with their own guidelines. Borrowers have received denial letters based on:

  •  Insufficient communication between SBA and lenders
  •  Misapplication of SBA’s Interim Final Rules (IFRs) or affiliation rules
  •  Mistakes by SBA surrounding the loss or misuse of borrower information

Borrowers should be aware that such denials are appealable. Consider challenging forgiveness denials if you believe SBA’s decision is in error.

Read our full guide to SBA’s PPP loan forgiveness denial below to learn more about how to appeal a denial, the criteria required for an appeal, and who can represent your company in the process. 

How Do I Know if My Business’ PPP Loan Forgiveness was Denied?

If SBA denied your application, you will receive an SBA Final Decision Letter in the mail. 

Learn more about what to do if your PPP loan is not forgiven, here.

How Do I Know Why My Business’ Forgiveness Application was Denied?

The first page of the Final Decision letter contains a section indented and in bold that provides the reasons SBA denied your request for forgiveness. It’s important to understand why SBA is rejecting the forgiveness application before taking action- such as appealing the denial.

Who Makes the Decision on PPP Forgiveness?

The decision to deny your PPP loan forgiveness can be made by:

  • Your lender (i.e. bank, credit union)
  • The Small Business Administration (SBA)

How Much Time Do I Have to Appeal a PPP Loan Forgiveness Denial?

You must respond to SBA and submit your appeal within 30 days of the date listed on your SBA Final Decision Letter.  The timeline for SBA forgiveness appeals is inflexible. Once your initial 30-day period expires, you will lose your right to appeal SBA’s denial to forgive your PPP loan.

How Do I Appeal a PPP Loan Forgiveness Denial?

You must appeal denials of forgiveness to the SBA’s Office of Hearings and Appeals (OHA) within the 30-day period. 

File appeals through OHA’s case portal. Filings for PPP appeals received in any other manner may be rejected and not docketed for processing.

SBA states that OHA has jurisdiction over appeals where SBA has provided the borrower with a PPP final loan review decision finding the borrower:

  • Is ineligible for a PPP loan
  • Is ineligible for the PPP loan amount received
  • Used the loan proceeds for unauthorized uses
  • Is ineligible for the PPP loan forgiveness amount determined by the lender in its full or partial approval decision issued to SBA, or
  • Is ineligible for PPP loan forgiveness when the lender has issued a full denial decision to SBA.

Learn more about how to appeal an SBA PPP forgiveness denial, here. 

What Information Do I Need to Provide in the Appeal?

The criteria for an appeal filed with the SBA are strict. According to SBA, appeals must contain:

  • A complete, detailed statement as to why the SBA loan review decision is erroneous, with accurate information and legal arguments supporting the statement;
  • No more than 20 pages (not including attachments)
  • Clearly labeled exhibits and attachments

Due to the strict criteria of the appeal, we recommend hiring a qualified attorney to represent your business and help you to create a strong, successful appeal. 

Who Can Represent My Business in the Appeal Process?

An identified legal representative of the business or a qualified attorney must represent the appeal since the SBA PPP loan is a business loan and not a personal loan. To represent your business, one must be:

  • A shareholder owner 
  • An officer, or
  • An attorney

Who Can’t Represent My Business in the SBA Appeal Process?

The following positions are not legally entitled or allowed to represent businesses in the SBA appeal process:

  • Certified Public Accountants (CPAs)
  • Lenders 
  • General Employees

What if I Lose My Appeal?

Any appeal denied in the Office of Hearings and Appeals will have to go to a higher court. Why? Because SBA is a federal agency. The process of going to federal court can be extremely tedious and expensive due to the strict regulations. 

To avoid the costly and time-consuming process of going to the federal district court, we recommend hiring a qualified attorney to make sure you’re building a strong appeal for your business.

While each case is unique and this is not an indication of success in other cases nor a promise of results, our team at Milikowsky Tax Law has extensive experience in government audits and cases involving government entities from IRS to SBA and CSLB.  

Contact Milikowsky Tax Law and learn how we can help.

you have 30 days to appeal an SBA PPP Loan denial

The U.S. Small Business Administration (SBA) is currently going through loan forgiveness applications to approve or deny claims. Businesses that filed for a PPP loan during the COVID-19 pandemic and used the funds correctly can apply for loan forgiveness.

According to SBA, the loan is eligible for forgiveness if, “during the 8- to 24-week covered period following loan disbursement:

  • Employee and compensation levels are maintained,
  • The loan proceeds are spent on payroll costs and other eligible expenses, and
  • At least 60% of the proceeds are spent on payroll costs.”

Many businesses, however, who used the funds correctly, may receive a letter of denial from SBA. Continue reading to learn more about what to do if SBA denies your forgiveness claim.

WHAT TO DO IF YOU RECEIVE A LETTER OF DENIAL

If you received a letter from the SBA denying your PPP loan forgiveness request within the last 30 days, the clock is ticking. You have 30 days to respond and file your appeal. The timeline for SBA forgiveness appeals isn’t flexible. Once your initial 30-day period expires, you will lose your right to appeal SBA’s denial to forgive your PPP loan.

Steps to Appeal

Watch our full video to learn more tips about how to appeal an SBA PPP loan denial.

 

The following steps are not a complete guide; rather, a summary of action items.

  1. Review “Final SBA Loan Review Decision Letter”
  2. Confirm your deadline to appeal the SBA decision
  3. Gather your documents and facts to identify issues to raise in your appeal
  4. Review SBA’s prior legal decisions and rulings
  5. Draft your appeal (max 20 pages) and include exhibits (your evidence) and SBA’s Final Loan Review Decision Letter
  6. *You must include your legal arguments, facts, and legal authority to support your position to show SBA’s denial was “clearly erroneous” (there are additional requirements – see SBA’s website)
  7. Create an online account at appeals.sba.gov
  8. Answer all questions truthfully and completely when responding to SBA’s online questionnaire
  9. Identify a legal representative for your business to handle the SBA appeal
  10. Upload your appeal, exhibits, and SBA Final Decision Letter

We strongly recommend obtaining an attorney to represent your company, prepare, and file your formal appeal. Note that a CPA is not authorized to represent your business during the appeals process.

The ONLY individuals who can represent your company in the appeals process are: 

  • An owner
  • A company officer
  • An attorney

For more information on what to do if your PPP loan is not forgiven, read our article here.

 

act quickly to appeal an SBA PPP Loan forgiveness denail

the sba denial is serious. partnering with an attorney helps your business find the best outcome

During the COVID-19 pandemic, the Small Business Administration (SBA) doled out Payment Protection Program (PPP) loans to qualified businesses. Over the course of the program, SBA granted over $809 billion in loans.

SBA is currently processing loan forgiveness and loan denials. Businesses that meet SBA PPP loan forgiveness terms are eligible for forgiveness of their PPP loans. 

SBA PPP Loan forgiveness is only eligible for businesses if they used the loan accordingly:

  • “Employee and compensation levels are maintained,
  • The loan proceeds are spent on payroll costs and other eligible expenses, and
  • At least 60% of the proceeds are spent on payroll costs.”

However, if a business fails to meet the forgiveness criteria, they are responsible for payment in full of the total loan amount. 

If your business applies for PPP loan forgiveness and it is denied, you have 30 days to appeal the denial. This deadline is unwavering, and appeals submitted after 30 days are not eligible, and your business will be responsible for paying back the loan amount in full.  

The agency is also selective on who can defend your business during an appeals process. The only people who can represent your business are:

  • An attorney 
  • The owner 
  • A company officer 

* A CPA cannot defend you nor can they appeal your forgiveness denial. 

What are the Different Types of Appeals?

The Office of Hearings and Appeals (OHA) has jurisdiction over SBA PPP loans. When they deny a loan forgiveness application, it’s due to the following: 

  1. The business is not eligible for the PPP loan
  2. The business is not eligible for the PPP loan amount received;
  3. The business used the loan proceeds for unauthorized expenses;
  4. The business is not eligible  for the PPP loan forgiveness amount determined by the lender in its full or partial approval decision issued to SBA; or
  5. The business is not eligible for PPP loan forgiveness when the lender has issued a full denial decision to SBA.

Loan Forgiveness Denial Appeal Process

If your business receives an SBA PPP Loan denial decision letter, act quickly.

The following steps are a guide for what to do if your business receives a letter of denial.

  1. Review “Final SBA Loan Review Decision Letter”
  2. Confirm your deadline to appeal the SBA decision
  3. Gather your documents and facts to identify issues to raise in your appeal
  4. We strongly recommend retaining a trusted attorney to represent your company because they will prepare, file, and defend your formal appeal.
  5. Review SBA’s prior legal decisions & rulings
  6. Draft your Appeal (max 20 pages) and include exhibits (your evidence) and SBA’s Final Loan Review Decision Letter
  • You must include your legal arguments, facts, and legal authority to support your position to show SBA’s denial was “clearly erroneous” (there are additional requirements – see SBA’s website)
  • The appeal must also include a copy of the SBA loan review decision being appealed, a statement as to why the denial is erroneous, and the contact information of the business and/or the business’s attorney.
  1. Create an online account at appeals.sba.gov
  2. Answer all questions truthfully and completely when responding to SBA’s online questionnaire.
  3. Identify a legal representative for your business to handle the SBA Appeal.
  4. Upload your appeal, exhibits, and SBA Final Decision Letter. 
  5. Wait for the final decision.

For more resources on how to appeal an SBA PPP forgiveness denial, read our article, here. Keep in mind that partnering with an attorney, like our team here at Milikowsky Tax Law, can help save your business from potential mistakes.

 

 If SBA sends a Final SBA Loan Review Decision Letter, you have 30 days to submit an appeal. Partner with an attorney to help defend your business.

small businesses who were denied the PPP loan forgiveness can still appeal for forgiveness.

Business owners who applied for SBA PPP loan forgiveness, but were denied have a limited time frame in which to appeal the forgiveness denial. Read on to learn about the process of appeal, what steps you must take, and the strict timeframe in which you must file to appeal a Paycheck Protection Program loan forgiveness denial from the Small Business Administration. *

*The information provided is general in nature and not intended to give legal advice or to create any type of attorney-client privilege

Watch the video below to hear John Milikowsy review how to appeal an SBA PPP forgiveness denial. 

 

 

 

If you received a notice of denial of your PPP loan forgiveness, the first step is to confirm who denied your application. The denial can come from:

  • Your lender (Bank, Credit Union or Fintech)
  • The Small Business Administration (SBA)

If your lender denied your application, you may not have appeal rights and you will have to consult with the lender themselves to find out the reasons why the forgiveness was denied and what options you have going forward. 

If the SBA denied your application, you will have received an SBA Final Decision Letter in the mail. The letter will have a date printed on it. If you wish to appeal your forgiveness denial, you must reply to SBA and submit your appeal within 30 days of the date listed on your final decision letter. Failure to reply and submit an appeal by or before the 30-day limit means you may forfeit your appeal rights, and you will have to repay the full amount of the PPP loan.

 

SBA Final Decision Denial Letter 

The first page of the Final Decision letter contains a section indented in bold that provides the reasons that SBA denied your forgiveness application. Before taking action, it’s important to understand why SBA is rejecting the forgiveness application.  

 

Find Evidence Through Resources 

Your obligation, and duty when filing an appeal is to show that SBA was clearly in error in denying your forgiveness application. In order to show that SBA made an error in denying your application, it’s crucial to research, provide legal arguments, and evidence to counter their claim. Evidence is critical to support your case.

SBA uses the Office of Hearing and Appeals (OHA) as a resource to hear cases from borrowers seeking appeals for unforgiven loans. Review their website to view their published prior opinions, one of them may relate to your case. 

The best recommendation is to hire a qualified attorney to make sure that you’re putting the most successful appeal together. Losing your appeal will necessitate filing with the federal district court, a costly and time-consuming process. There are myriad rules and regulations involved in federal cases.  Because SBA is a federal agency, any appeal denied in the Office of Hearings and Appeals will have to go to a higher court. 

The CARES act provided the general authority for SBA to issue PPP loans. This act also provides the limitations and the qualifications for which companies qualify for the loan, and for loan forgiveness. Your attorney will know the CARES Act and all of its intricacies.  IF you choose to represent yourself in your appeal, be sure to review the guidelines and details of loan forgiveness on their website. 

The Code of Federal Regulations (CFR) is another SBA published body of law. These regulations help clarify what companies were eligible or ineligible for the PPP loan and for loan forgiveness. For additional clarity, the CFR provides SBAs operating procedures.

By researching the laws and guidelines set forth by SBA, the CARES Act, the CFR guidelines, and gathering all of the documentation around your original application and denial, you can create a strong, coherent case for SBA to overturn their denial of forgiveness.  

 

Creating the Appeal

The criteria for an appeal filed with the SBA are strict.  The appeal must be 20 pages or less. In order to meet this limit, you must have your facts clearly stated so they can be easily understood. There is no room for excessive rambling or lengthy explanations. 

The appeal itself must provide legal authority and evidence to support your arguments, as well as include the SBA’s final decision letter. Without submitting the < 20-page appeal document and the original final decision letter, your case can be summarily dismissed, which waives your right to appeal. 

Since the SBA PPP loan is a business loan, not a personal loan, an identified legal representative of the business must represent the appeal (or a qualified attorney). Only one of three people can legally represent the business:

  • Shareholder owner 
  • An officer 
  • An attorney 

Who is not legally entitled or allowed to represent businesses in the SBA appeal process? 

  • Certified Public Accountants (CPAs)
  • Lenders 
  • General  Employees

Step one is to submit the appeal through the SBA online portal at appeals.sba.gov. The appeal form will ask you to create an account so you can log in and upload the appeal. Once your account is created, there will be other questions in the portal for you to answer to complete the process. Finally, upload the following documents into your account: 

  • SBA appeal
  • Decision letter
  • All evidence collected 

This information must be collected and submitted before the 30-day window closes. 

 

Post Appeal Submission

After your appeal is submitted, we recommend sending a copy of your appeal to your lender. They may defer your loan repayment for the loan amount until the SBA makes its final ruling. The time it takes for SBA to reach a decision varies. Best practice is to log into your portal account several times a week to check for messages or notices that indicate the status of your appeal.  At times, there may be requirements that you have to respond to. 

Throughout this process, it’s essential to respond in a timely manner. Missing deadlines is a mistake that can lead to a denied appeal– and thereby having to repay the loan amount in full. 

If your appeal was denied, you can request a reconsideration of the decision. If the reconsideration is denied, then the next step is to file a case in the federal district court. At this point, the cost and inconvenience of the process increase many times over. Because of this, be sure you take the proper time to file your initial appeal.  We recommend hiring an attorney who has experience with government agencies, is highly qualified, and understands your business.

 

Client Case study

One of our recent clients is a business owner whose PPP loan was denied forgiveness.  He came to us to see if we could help with his appeal to the SBA.  He and many other business owners in his industry applied for and were granted PPP loans at the start of the COVID-19 pandemic.  When it came time to apply for forgiveness, he had his bookkeeper submit all of the documentation to show that they had used the funds correctly to cover 75% payroll costs and 25% operating expenses.  Over the course of the next months, his fellow business owners received their forgiveness decisions and were all granted forgiveness by the PPP.  Except him.  Our client received a final decision letter of denial from the SBA. 

In this case, The bank recommended forgiveness but the SBA denied the forgiveness because his bookkeeper accidentally put the wrong NICS code. When he got the denial the business owner did not get on the phone himself with SBA but put his bookkeeper on the line with the agency to explain what his company does. The bookkeeper’s description of the business led them to believe he was in a prohibited industry… and they denied the forgiveness.

At the SBA the overwhelming number of cases has caused an influx of new hires, many of whom are learning the codes and structures of SBA loan forgiveness on the job.  This means there is less nuance in a rejection than a business owner might think.  Often, the SBA employees are simply matching NICS codes with industries, checking them against prohibited business lists, and issuing rejections. 

Our team researched the causes for the loan forgiveness denial, wrote the under 20 page appeal letter, gathered all supporting evidence, and argued on his behalf successfully to the SBA OHA.  

While each case is unique and this is not an indication of success in other cases nor a promise of results, our team has extensive experience in government audits and cases involving government entities from IRS to SBA and CSLB.  

For more information on SBA PPP loans, read our article here. 

 

PPP loans that are not forgiven have a 30 day window where you can appeal for forgiveness

 

As you prepare your tax returns, stay up to date on when taxes are due, child tax credit payments, economic impact payments, and charitable contributions.

On January 24th, the Internal Revenue Service (IRS) announced the start of tax season. Now, the agency can accept federal income tax returns for 2021. With tax season officially in progress, the April deadline is quickly approaching. Organizing tax filing information well in advance, and understanding any tax changes for filing this year sets you and your business up for success. Avoid filing taxes last minute as you may make errors that can flag your business for an Internal Revenue Service (IRS) audit. 

Before filling out your business’ tax return, we’ve put together tips to help you successfully file this year. 

Tax Return Due Date

Each year, taxes are due April 15th. The date is unflinching unless it falls on a weekend. This year, the deadline is extended to April 18th for the majority of taxpayers because the 15th lands on Emancipation Day celebrated in Washington D.C. However, we do not recommend waiting until then to start assembling and filing your taxes. 

The following are the approved extensions to the April 18th deadline:

  • April 19th for taxpayers in Main and Massachusetts to observe Patriots’ Day 
  • May 16th for the victims of tornados in Illinois, Tennessee, and Kentucky
  • May 16th for the victims of wildfires in Colorado 
  • October 17th for taxpayers requesting an extension 

 

PPP Loan Deductibles   

Small business owners who applied for PPP loan forgiveness may need to look into different tax deduction strategies. Claiming PPP funds depends on if they were forgiven or not. Businesses that had PPP loans forgiven are not eligible to claim deductibles on their taxes because it is essentially “double-dipping.” However, businesses that did not have PPP loans forgiven can claim the expenses on their tax forms this year.  

 

Claim All Reported Income 

When reviewing your business’ tax returns, IRS matches what you reported as income to the 1099 – MISC forms your independent contractors fill out. IRS has a copy of the 1099-MISC forms your business receives and will cross check accurate reporting is made. If they find an error between the filings, the agency may flag you for an audit. 

Taxable and Nontaxable Employee Benefits 

Some employee benefits that employers give are considered taxable while others are considered non taxable benefits. All help retain top talent but come tax season, providing benefits that don’t cost your employees more when filing is a financially beneficial opportunity. 

IRS considers taxable benefits as:

  • Vacation expenses 
  • Bonuses 

Non-taxable benefits include: 

  • Accident and health benefits 
  • Educational assistants 
  • Employee discounts 
  • Meals 

Classify your business correctly

The various business classifications are taxed differently. Misclassifying your own business can lead to overpaying, or underpaying taxes. If the agency finds an underpayment of taxes, they will most likely open up an audit against your business. 

Different business classifications include:

  • Sole proprietorships 
  • Corporations
  • S Corporations 
  • Partnerships 
  • Limited Liability Company (LLC)  

Charitable contributions 

Businesses that give charitable donations help the community and can use their contributions towards tax deductions. The size of your business determines how much in charitable deductions you’re able to file. 

Qualified Business Income Deductions 

After 2017, IRS implemented the qualified business income deduction. This deduction states, “many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction.”

Through this change, certain business entities can deduct up to 20% of business income along with 20% for qualified real estate investments on filings. 

Transportation Costs

Businesses who use company car vehicles can use it as a deduction as well. If the vehicle is solely used as a company car, the entire cost can be used towards deductions. However, if the vehicle is split between personal use and business use, only the business use can be deducted. 

Deductions can be calculated through:

  1. Standard Mileage Rate 
  2. Actual expenses 

 

Keep Organized Records 

Having the receipts for business expenses makes claiming it as a deduction a smoother process. Not every expense claimed as a deduction needs the receipt to back it up, but it helps, especially if IRS decides to open up an audit against your business. 

Tips to Make Filing Easier This Year

Staying up to date on new tax updates is a great starting point to making filing easier this year. Another way you can make filing taxes as streamlined as possible is this year is to:

  1. Gather and organize your tax records ahead of time
  2. Accurately report income and expenses
  3. Make sure you’ve withheld enough

Planning for tax season ahead of time gives you the opportunity to file the most accurate returns possible. In doing so, you avoid triggering an IRS audit. If you are worried about flagging an IRS audit when submitting your business’s tax returns, read our article on six triggers of an IRS audit here

This 2022 tax season, stay updated on our tips for what to look out for when filing your business taxes to successfully file this year.

CPA vs Tax Attorney: What’s the difference?

In some cases, it may be difficult to distinguish what your CPA is capable of helping you with and which tasks are better suited for a tax attorney. Both are experts when it comes to tax matters but in different ways. 

While your CPA is an expert at preparing and submitting your taxes correctly, you’ll need a tax attorney in the event that Internal Revenue Services (IRS) notices inconsistencies in your tax submissions or if you’re the subject of an audit. In any case, you’re best off having access to both experts. 

What does a CPA do? 

A Certified Public Accountant (CPA) has a significant educational background under their belt. They are required to have completed 150 hours or more of undergraduate educational studies before passing an extensive CPA examination. 

Additionally, they have to commit to 120 hours of continued education every 3 years. As such, they considered some of the highest level experts when it comes to handling tax preparation. A simple way to think of CPAs is that all CPAs are accountants, but not all accountants are CPAs. The process of becoming a CPA is more complex than an average accountant. 

A CPA’s services are not often used by any average taxpayer but instead are usually used in more complex cases. CPAs know how to abide by federal laws while still minimizing your tax liability and maximizing benefits. Developing a strong ongoing relationship with a CPA may suit your needs if you are looking to build a long-term tax plan and need support sticking to it. 

CPAs are often capable of providing various services to their clients in addition to tax preparation. Some additional services they may provide include the following: 

  • Financial record review
  • Maximizing deductions 
  • Business structuring 
  • Health insurance selection
  • General accounting

Many people choose to have a go-to CPA available for support on a regular basis. If this is not the case for you, you may choose to consult them when:

  • Filing your taxes
  • Completing an application for a loan
  • Completing an internal audit
  • When reviewing tax payments and balances

Their skills and expertise are best suited to assist you when handling these situations. 

What does a tax attorney do?

While a tax attorney is still an excellent resource to taxpayers, they serve a different set of needs than CPAs. While CPAs are technically qualified to represent you before a court in the event of an audit, a tax attorney is likely a better choice in situations where you may be involved with trouble with tax authorities. 

Similar to CPAs, tax attorneys have to complete an intensive educational path before qualifying to satisfy their role. After completing a bachelor’s degree, they must complete a Juris Doctor degree and study to take the bar exam for the state in which they intend to practice. Once they have passed the bar exam, their license must be kept up with continued ongoing education. On top of that, many tax attorneys choose to pursue a Master of Laws in Taxation to further their specialization in their field. 

Tax attorneys specialize in the legalities of tax payment and their services are most often called upon in defense cases when taxpayers are faced with audits from IRS, EDD, or other federal tax authorities. While tax attorneys may have slightly varying specialties, one thing most tax attorneys have in common is expertise in tax controversy and dispute resolution. 

One of the benefits of working with a tax attorney is that only tax attorneys have an attorney-client privilege that protects communication between a client and an attorney. This privilege can restrict IRS and California State tax agencies from discovering information provided to attorneys in confidence.

Tax attorneys fulfill various services for their clients as previously mentioned. The following include the various reasons you may need to consult a tax attorney: 

  • IRS tax audits 
  • Criminal tax defense 
  • Reporting ownership of foreign bank accounts and corporations 
  • International business transactions 
  • Tax disputes and IRS tax collection 

Who can represent your business during an SBA PPP Loan Forgiveness Appeal?

SBA has started giving loan forgiveness for businesses that used the PPP loans during the early stages of the pandemic. However, businesses deemed to have not used the funds as they were intended received loan forgiveness denials. 

If SBA denied your business’s loan forgiveness application, they will send an SBA Final Decision Letter in the mail. If you wish to appeal your forgiveness denial, you must reply and submit an under 20-page appeal 30 days before the date printed on the decision letter. Submission after the 30-day mark forfeits your appeal rights and will require you to repay the full PPP loan amount. 

Only three people can legally represent your business during an SBA PPP Loan Forgiveness Appeal:

  • An attorney
  • Shareholder owner
  • An officer

Those who are not legally entitled or allowed to represent businesses during an SBA appeal include: 

  • Certified Public Accountants (CPAs)
  • Lenders 
  • General Employees

An attorney is legally entitled and allowed to represent your business during the appeals process. They will be able to research why your application was denied, collect supporting evidence, and create the 20-page appeal for SBA.  

Final Thoughts

While CPAs and tax attorneys both work within a similar framework, their unique specialization equips them for varying roles. In some cases your business may only need to use the services of one or the other, however, in most cases, the two roles complement one another. While your CPA may be an excellent ongoing partner to assist with the day-to-day management and filing of your taxes, they may not be the best-suited partner in the event of trouble with tax authorities. 

Rather than challenging your CPA to attempt to manage tasks outside of their usual specialties, reach out to an experts attorney to assist with any legal tax concerns you may have. Curious about what you should be paying for a tax attorney? Read our article here explaining different instances when hiring an attorney may be worth your while. 

 

CPA vs Tax Attorney: What’s the difference?

A pile of coin

In the midst of the Coronavirus pandemic, the CARES Act provided the funding for the SBA to implement the Paycheck Protection Program (PPP) to provide financial assistance to businesses. While many jumped at the opportunity to receive financial support, the aftermath of business audits has made some regret they did. 

The CARES Act grants the government the flexibility to more easily audit businesses that received PPP loans. The positions that allow the government this power are known as supervisory entities and include the following 

  • Special Inspector General for Pandemic Recovery 
  • Pandemic Response Accountability Committee

Supervisory entities were put in place to prevent and detect fraud and abuse of PPP loans issued under the CARES Act. Businesses with discrepancies between their taxes and their loan requests are now facing serious repercussions.

The audits and investigations related to PPP loans will be conducted by the SBA. All documentation involved in these investigations must be retained for six years following. If it is determined that the recipient of a PPP loan was either ineligible or spent the loan on unapproved uses, they may be required to repay a portion, if not all, of the loan. Additionally, depending on the circumstances, the borrower’s case may be referred to the authorities for further civil or criminal punishment. 

On April 28th, Treasury Secretary Steven Mnuchin announced that ALL PPP loans over $2 million would experience a full investigative audit by the SBA. For many businesses, these SBA audits have become equally, if not more, daunting than IRS audits. 

The potential for criminal exposure has also become an issue with these SBA audits and investigations. The FBI has joined forces with SBA in conducting the audits and investigations of wrongly claimed PPP loans. While loan application discrepancies are likely to be the most common offenses, these audits bring light to various other concerns for some businesses. 

The government has a wide range of going after businesses that they suspect to have acted in bad faith. Businesses may face fraudulent charges connected to the CARES Act including:

Another option for businesses who received PPP loans is to begin the process of having their loan forgiven. As of October 8th, the U.S. Treasury in conjunction with the SBA released a simplified process for businesses that received $50,000 or less to have their loans forgiven. To qualify for such forgiveness the business must meet certain criteria to prove that they utilized the loan payment as it was intended, to support payments of employee payroll, and to pay other specified business expenses. 

If your business received a PPP loan and are unsure or think you may have filed incorrectly, contact John Milikowsky for support today! Prepare for an SBA business audit before it’s too late!