The IRS recently issued guidance that confirms improperly forgiven Paycheck Protection Program (PPP) loans are still taxable.
When a taxpayer misrepresents or omits information to qualify for forgiven PPP loans, the taxpayer is not eligible to exclude the forgiveness from income and must include in income the portion of the improper portion of forgiven PPP loan proceeds, the guidance states.
While many PPP loan recipients qualified to receive loan forgiveness, the IRS discovered some recipients received loan forgiveness that did not meet one or more conditions.
The IRS encourages taxpayers who inappropriately received forgiveness of their PPP loans to comply by filing amended returns that include forgiven loan proceed amounts in income. Learn more.