To prevent confusion, the IRS notified lenders on Tuesday, Sept. 22, that they should not file cancellation-of-debt information returns or furnish payee statements under Sec. 6050P to report the amount of qualifying forgiveness with respect to covered loans made under the Paycheck Protection Program (PPP).
Sec. 6050P generally requires a lender that discharges at least $600 of a borrower’s indebtedness to file a Form 1099-C with the IRS and to furnish a payee statement to the borrower.
However, in this case the IRS warns that the filing of such returns could result in the issuance of notices of underreported income to eligible recipients, and the furnishing of such payee statements to eligible recipients could cause confusion. Learn more.