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AICPA applauds additional clarity in Treasury FAQs on Paycheck Protection Program

Key changes are in line with AICPA recommendations and advocacy points.

By Erik Asgeirsson and Mark Koziel, CPA, CGMA

Please note: This item is from our archives and was published in 2020. It is provided for historical reference. The content may be out of date and links may no longer function.

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Late Monday night, Treasury and the U.S. Small Business Administration (SBA) released FAQs on the Paycheck Protection Program (PPP), the $349 billion small business relief program that is a key part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136.

Over the past week, the AICPA and our small business funding coalition have been advocating for additional clarity on certain provisions of the PPP. We’ve been working hard to drive a common understanding and approach around PPP implementation. The AICPA has been leading with recommendations and interpretations based on our understanding of the intent of the program.

These FAQs from Treasury and the SBA are critically important to help facilitate the funding of small businesses. We thank them for producing these clarifications and swiftly communicating this update.

The FAQs align with many of the recommendations we made, such as:

  • Using the gross payroll approach for both loan application and forgiveness. Also, the guidance clarified that the employer’s share of Federal Insurance Contributions Act taxes should not be included.
  • The $100,000 salary limitation does not include health care, retirement benefits, and state and local taxes.
  • Applicants that use Professional Employer Organizations (PEOs) can provide payroll reports since they cannot produce individual entity payroll tax documents.
  • The time period for calculating payroll costs for the maximum loan amount.

These clarifications are going to have a significant impact in the total eligible funding amount available to small businesses. We plan to release an updated set of AICPA recommendations later today that will include a distilled version of these FAQs.

Our overall goal is to help minimize confusion for both our firms and PPP applicants and also to drive consistency with lenders. The effectiveness of the PPP depends on the quick distribution of funds, so it’s crucial we minimize complexity for small businesses that desperately need support now.

These are historic times for our clients and our stakeholders. We know there are other outstanding issues, and we will continue to drive recommendations and advocacy to produce further clarity.

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The AICPA’s Paycheck Protection Program Resource Center houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus. 

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA‘s coronavirus resources page.

— Erik Asgeirsson is president and CEO of CPA.com. Mark Koziel, CPA, CGMA, is the AICPA’s executive vice president–Firm Services. To comment on this article or to suggest an idea for another article, contact Kim Nilsen, the JofA‘s publisher, at Kim.Nilsen@aicpa-cima.com.