HHS Provider Funds & PPP Update – December 17, 2020

Current Updates

  1. If you have received additional HHS Provider Relief funds recently, please keep in mind that these funds are taxable, so a portion of the funds should be kept for potential taxes.
  2. Continue to watch for our email blasts as we will be providing updates if any stimulus agreement is passed and signed into law, and how this may affect your business.
  3. PPP Loans:
    • For PPP loans, do a full-time equivalent (FTE) check to make sure your December 31, 2020 FTE’s meet the safe harbor requirements.
    • We have begun to recommend applying for forgiveness, as there have been no recent updates in rules and banks have started to accept the applications.
    • Currently, the expenses used for the PPP loan forgiveness are still nondeductible in 2020, but the bi-partisan proposal being considered by Congress addresses this oversight.

HHS Funding

  • Many practices are beginning to receive the most recent round of HHS funding.
  • HHS Provider Relief Funds are considered taxable income. You should set aside a portion of the funds for potential taxes in addition to any tax projection numbers we may have already communicated.
  • According to the new HHS guidance, HHS considers taxes imposed on the Provider Relief Fund payments to be an eligible use of these funds. Source
  • Providers who received $10,000 or more in aggregate Provider Relief Fund payments will need to submit a report on how they used the PRF payments. Here is a link summarizing the reporting requirements. BWTP can assist with this reporting, so please contact us if you are needing assistance.

PPP Full-Time Equivalent (FTE)

The 24-week covered period for your PPP loan is likely over and you have applied for forgiveness, or in the process of applying. To apply for forgiveness, you will need to make sure you satisfy the FTE rehire safe harbor requirement.

To qualify for complete forgiveness, you need to meet the safe harbor test. Your full-time equivalent count for the week of the forgiveness application submission (or December 31, 2020, if earlier) must be the same as it was on February 15, 2020, less allowed reductions mentioned below. FTE’s using paid vacation time still count as an employee.

The Practice may exclude any reduction in FTE’s due to the reasons below:

  1. The Practice made a good faith written offer to rehire an employee and the employee rejected the offer.
  2. Employees who were fired for cause.
  3. Employees voluntarily resigned or requested a reduction in their hours.

Stimulus Bill

In the next few days or weeks there will likely be a new stimulus bill passed by Congress.

Continue to make planned estimated tax payments and watch for our email blasts for any updates. There could be new programs or opportunities in the final bill, but we will need to wait until they have enacted changes.

Please contact your BWTP accountant if you have questions about any of these items.

Robert (Bob) Schmidt, CPA

Principal at BWTP, P.C. Read Bob’s bio here.

  1. William B Lewis Jr Reply

    were HHS distribution funds excluded from taxable income in the year end legislation ?

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