Page 24 - Bulletin Vol 25 No 3 - Sept-Dec 2020 - Final
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Article | Legal
FAQs for PPP Forgiveness
By Jennifer Kirschenbaum, Esq.
Kirschenbaum & Kirschenbaum, P.C.
As we wait to see whether more stimulus will be passed benefitting practices, many of us are preparing to
file for forgiveness of the Paycheck Protection Program loans received in the spring of 2020. To address
common questions related to the forgiveness process, The US Department of Treasury promulgated FAQs
on December 9, 2020, worth review. We will address the FAQs we believe most relevant to your practice
below, in turn, and the full list of PPP FAQs is available here - https://home.treasury.gov/system/files/136/
Paycheck-Protection-Program-Frequently-Asked-Questions.pdf.
Q. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of
an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value? A:
No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not
to non-cash benefits, including: (i) employer contributions to defined-benefit or defined-contribution
retirement plans; (ii) payment for the provision of employee benefits consisting of group health care
coverage, including insurance premiums; and (iii) payment of state and local taxes assessed on
compensation of employees.
The “employee compensation exclusion” is incredibly important for owners because it clarifies the $100k
cap as applying to cash compensation and allowing for additional monies as expended as contributions to
defined-benefit or defined-contribution retirement plans and other benefit programs including healthcare
coverage, as well as taxes. However, when working on what to claim as “PPP expenditure” be mindful of
your year over year expenditures in this category and allocations for the “covered period”. Most advisors
are recommending you allocate a proportionate share consistent with historic expenditures, in preparation
for any potential lender review or SBA audit.
Q: Do PPP loans cover paid sick leave? A: Yes. PPP loans covers payroll costs, including costs for
employee vacation, parental, family, medical, and sick leave. However, the CARES Act excludes qualified
sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families
First Coronavirus Response Act (Public Law 116–127).
The Legislature rightly acted and provided for coverage for paid sick leave taken as a result of potential
Covid exposure or infection – recognizes this expense carried by the employer is likely unduly
burdensome. The issue is there are several avenues of recovery for the Employer – there is coverage for
monies to be expended through PPP or a tax credit allowance created under the Families First Act. The
issue for the Employer – double dipping. Double dipping is not allowed. Be mindful of how you are
allocating paid sick leave benefit – if you are allocating towards PPP funds for coverage, be sure not to
also request a tax credit.
Q: What time period should borrowers use to determine their number of employees and payroll costs to
calculate their maximum loan amounts? A: In general, borrowers can calculate their aggregate payroll
costs using data either from the previous 12 months or from calendar year 2019. … Borrowers may use
their average employment over the same time periods to determine their number of employees, for the
purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA’s
usual calculation: the average number of employees per pay period in the 12 completed calendar months
prior to the date of the loan application (or the average number of employees for each of the pay periods
that the business has been operational, if it has not been operational for 12 months).
24 | Nassau County Dental Society ⬧ www.nassaudental.org
