Forms 1099-C Are Not Required for Forgiven PPP Loans
The IRS recently released Announcement 2020-12, which will be published in Internal Revenue Bulletin 2020-41 on 10/13/2020. The announcement provides welcome reporting relief related to PPP loan forgiveness.
Many financial institutions offered Paycheck Protection Program (PPP) loans that were created as part of the CARES Act in March 2020. As part of the program, loans can be forgiven in part or in full if certain criteria are met.
Generally forgiveness of debt is subject to information reporting under Internal Revenue Code Section 6050P, requiring a lender to issue IRS Form 1099-C to the borrower and file a copy with the IRS. However, consistent with a forgiven PPP loan’s status as tax-free, Announcement 2020-12 notes that lenders are not required to, and should not, file Form 1099-C to report forgiven portions of PPP loans.
For more information or a discussion on how this may affect your bank, please contact Adam Aucoin or your BNN tax advisor at 800.244.7444.
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