SBA Issues Loan Necessity Questionnaire

Nov 03, 2020

The Small Business Administration (SBA) has issued new loan necessity questionnaires which all businesses with PPP loans greater than $2 million will be required to complete. These questionnaires are intended to help the SBA determine whether the Borrower’s certification of economic uncertainty made the loan request necessary to support ongoing operations was appropriate. SBA has developed two distinct versions of the loan necessity questionnaire: one for for-profit borrowers, and one for non-profit borrowers.

To refresh, during the initial PPP Loan application, borrowers had to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” However, at no point did the SBA provide any material guidance as to what this certification meant, leaving many borrowers anxious. The limited guidance during the loan application phase only stated borrowers must take into account their current business activity and their ability to access other sources of liquidity.

Please note, at this time these forms are not available on the SBA or Treasury website. It is anticipated these questionnaires will come directly from the lender and/or servicer. Lenders who have submitted loan forgiveness on behalf of impacted borrowers will receive a request from the SBA for completion of the form. While the instructions indicate the receipt of the questionnaire does not necessarily mean the SBA is challenging the good-faith certification, impacted borrowers are required to submit the completed forms within 10 business days of receipt from the lender.

Given the short turn-around time, we recommend that all borrowers with aggregated PPP loans of $2 million or more familiarize themselves with these forms now, and begin to gather related documentation

We encourage impacted PPP borrowers to reach out to their WVC advisor for assistance with the completion of the form, as detailed financial information is required.

Categories: COVID-19

Election 2020 Tax Policy Comparison

Oct 15, 2020

As the 2020 presidential election inches closer, how do President Trump’s and Vice President Biden’s tax proposals compare?

Check out our resources below. In addition, William Vaughan Company’s Tax Practice Leader, Sandi Towns has outlined some estate tax planning considerations in our latest WVC Short, here.

Flyer_Tax Comparision_2020 Presidential Election Tax Comparison

Categories: Tax Compliance, Tax Planning

IRS Modifies 1099 Forms & (Re) Introduces 1099-NEC

Sep 01, 2020

The IRS is making some significant changes to the 1099 process. Beginning with the 2020 tax year, a new 1099-NEC form will be used for reporting non employee compensation (NEC) payments. Previously NEC was reported in Box 7 of the 1099-MISC form. These payments will now be reported in Box 1 of the new 1099-NEC form. The 1099-NEC made an appearance in the 1980’s and is now making a comeback to alleviate deadline confusion caused by separate deadlines for Form 1099-MISC that report NEC in box 7 and all other Form 1099-MISC for paper filers and electronic filers. Companies will start reporting on the new Form 1099-NEC in January 2021.

There are several parts of the new 1099-NEC form worth noting:

  • Box 1 is where you key in the dollar amount of non employee compensation.
  • Box 4 is used for any amount you held back to comply with backup withholding requirements.
  • Boxes 5-7 are used to report any state withholding.

In addition, the removal of NEC payments on the 1099-MISC form has resulted in a reordering of information and corresponding boxes. These changes are listed below:

  • Box 7 is where you will now key in payer-made direct sales of $5000 or more
  • Box 9 is where you will report crop insurance proceeds
  • Box 10 is used for gross proceeds to an attorney
  • Box 12 is for Section 409A deferrals
  • Box 14 is for reporting non qualified deferred compensation income
  • Boxes 15, 16, and 17 is where you will report state taxes withheld, the state identification number, and the amount of income earned in the state.

The deadline for both paper and electronic filing of the 1099-NEC form for 2020 is February 1 for both the recipient and the IRS. The 1099-MISC is due to recipients by February 1 while they are due to the IRS by March 1 for paper filing and March 31st for electronic filing.

For up-to-date information on these changes, you can visit the IRS website or connect with us at 419.891.1040.

By: Aaron Gray, Accountant

Categories: Tax Compliance