IRS: Improperly Forgiven PPP Loans Are Taxable
The Internal Revenue Service is warning that improperly forgiven Paycheck Protection Program loans are taxable.
Recent guidance issued by the IRS office of general counsel, the IRS said Wednesday, “confirms that, when a taxpayer’s loan is forgiven based upon misrepresentations or omissions, the taxpayer is not eligible to exclude the forgiveness from income and must include in income the portion of the loan proceeds that were forgiven based upon misrepresentations or omissions.”
Taxpayers who inappropriately received forgiveness of their PPP loans “are encouraged to take steps to come into compliance by, for example, filing amended returns that include forgiven loan proceed amounts in income,” the IRS said.
IRS Commissioner Chuck Rettig said Wednesday in a statement that “this action underscores the Internal Revenue Service’s commitment to ensuring that all taxpayers are paying their fair share of taxes. We want to make sure that those who are abusing such programs are held accountable, and we will be considering all available treatment and penalty streams to address the abuses.”
