Are practices able to get loan forgiveness of a PPP loan AND get payroll tax reimbursement for employees being paid by the employer to stay home due to the EPSLA/EFMLEA legislation? Or can you only participate in one program?
One deals with employee leave from the office for illness-related items while the PPP loan program provides funds- which provides forgiveness for certain expenses paid for within a designated 8-week period.
In terms of permitted expenses within the PPP, the US Chamber of Commerce Reports the following items are excluded from the “Payroll costs” permitted for forgiveness:
- Payroll taxes, railroad retirement taxes, and income taxes
- Any compensation of an employee whose principal place of residence is outside of the United States
- Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act
Source: USCoC_PPP_Summary.pdf (82.7 KB)
They are NOT mutually exclusive - you can participate in both, but you cannot double-dip.
You may credit what you pay out in emergency sick leave and eFMLA against your payroll taxes, through Dec 31, 2020.
As Paulie indicates, these amounts can’t be paid-then-forgiven through the PPP program… since that would be double-dipping (that is, there is already a way to get “free money” for this.)
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Curious what other offices are doing with this as per doing both programs.
The PPP is great and will cover us for 8wks. Of course the concern is if the outbreak and shut down go on longer and last through summer (hopefully not and we can have patients back in office for WCC this summer). Of course PPP could be extended beyond 8wks, but no current legislation on this topic.
So we have heard from legal council that our office can be exempted from extended family leave and COVID-19 sick leave. For 8 wks sounds great, no double dip issues and its clean and we pay employees when sick or quarantined. Question is if we should be exempted office or not assuming we get the PPP loan. There will be an administrative burden if doing both programs, and potential benefit if quarantine goes on past the 8wks of the loan.
Curious to hear what other offices are planning on for this.
To exempt or not if getting the PPP loan?
I received a call from our payroll processing company today stating that if we participate in the PPP loan we would be ineligible for the Employee Retention Tax Credit made available under the CARES Act (such as the paid sick leave tax credit) or other credits available under the CARES Act. It was my understanding that you just couldn’t double dip. If we choose to take the credits, we can’t include that amount in our forgivable amount. Am I not understanding how this works?
The “Dr Berman’s Grid” shows which of the “Free money programs” are compatible with others:
Yes, it’s true that you can’t have PPP loan forgiveness and also use the Employee Retention Tax Credit.
The paid sick leave tax credit isn’t part of the Employee Retention Tax Credit, or even part of CARES thing, it’s a FFCRA thing. If you give emergency paid leave to employees, you may credit it against your payroll taxes, but you can’t use it as a PPP qualified reimbursable expense.
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Hi! I’m having a really hard time finding this "spreadsheet for cashflow. Please help
So just to be sure I understand this…if I have the PPP loan and I am also using EPSL under FFCRA, I cannot include in the forgivable amount of my PPP loan those wages that have been paid for EPSL?
But I can receive the tax credit under FFCRA for those wages paid for EPSL?
Thanks!
Since the EPSL under FFCRA is already “free money” via the payroll tax credit, the practice cannot also take it as an amount forgiven in the PPP.
The loans may be used for payroll costs, healthcare, rent, utilities, and other debts incurred by the business. Notably, the definition of “payroll” costs excludes leave payments made pursuant to the new Families First Coronavirus Response Act (FFCRA). Reimbursement for those leave payments is made through the tax credit process enacted as part of that legislation. These “paycheck protection” loans are available for other payroll expenses and other costs.
Source: https://www.fisherphillips.com/resources-alerts-cares-act-stimulus-will-permit-business-loans