If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. (209) 527-4247 (fax), https://www.grimbleby-coleman.com/resources/articles/265, 200 West Roseburg Avenue However, AB 1577 did not allow taxpayers to deduct PPP covered expenses. PPP Forgiveness: Urgent News About Nonconformity in California, Key Tax Credits Have Expired: What This Could Mean for You, 79245 Corporate Centre Drive, La Quinta, CA 92253. 1 A.B. YjA1NTM0ZGYzOWRkOTM0Yjg0MTQ3Mzc5MzhlNzQ1Y2UwOTA0Y2ZlODFkZjdi x000K@4CgCGt@1: L%v5Fo- j-YW v eyJtZXNzYWdlIjoiNWIzZGU0MDczYTM5MDRlMGI1ZTJmM2QxOGExOTlmZjY0 MjhlMTk5ZGY1MzFiNTZlYzQ5N2ZlMTAyOGIwYzZhZDAwOGU4ZDQ5N2U4Nzlj April 29, 2021 Governor Gavin Newsom has signed Assembly Bill 80, to amend the law. If this reduction threshold is not met, the expenses cannot be deducted on the California tax return. If your PPP amount is over $150, 000 and you received your PPP loan through a bank in the SmartBiz network, your bank will be contacting you directly about applying for Forgiveness. L. No. Note that the citation to the federal law presumably should be 15 U.S.C. 80 defines an ineligible entity in part as a taxpayer that does not meet the reduction from the gross receipts requirements of Section 636(a)(37)(A)(iv)(bb) of Title 15 of the United States Code, as added by Section 311 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260). See CAL. 0 California has NOT passed AB 80: the PPP forgiveness bill March 9, 2021 AB 80, the bill that would allow up to $150,000 of expenses to be deducted if paid with PPP forgiven loan amounts has not yet passed. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. The agreement incorporates the Governors Golden State Stimulus plan to assist California households that have borne the disproportionate economic burden of the COVID-19 Recession those with incomes below $30,000, as well as those unfairly excluded from previous federal stimulus payments. N2NiMzE4OGQyZTA0YjBmOWI5YTk3ZTg0MTJhOGY3YTVkZGIyNDllOTExZDgw 1577, 2019-2020 REG. & TAX. How does ESG fit into business strategy? The path to quality loyalty programs begins with adopting the right analytics looking deeper into customer purchase patterns to uncover true trends. Joshua Josh is a State and Local Tax (SALT) Principal in the San Francisco office of Grant Thornton LLP. 1577, 2019-2020 REG. Grant Thornton LLP is a member firm of GTIL. A.B. Credit: Spidell Tax, Analysis, and Education, 200 West Roseburg Avenue Drive maximum value across your supply chain. Watch industry leaders discuss advice on innovation. The PPPEA was enacted on March 30, 2021 and extended the covered period of the PPP from March 31, 2021, through June 30, 2021. California aligning with fed PPP loan treatment. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. You can count on us to prioritize and complete work to the best of our ability based on these changes. Please enable JavaScript to view the site. SESS., 1 (see new CRTC 17131.8(c)), 2 (see new CRTC 24308.6(c)). The agreement also provides $12 million in state funds to support associated county administrative workload. This tax treatment would also extend to the Economic Injury Disaster Loans as well. Overview. NDZkZjRjZDY4ODVjMjk3OGE5MjViODBjYjExOTliZWFhNzgwY2FjMTkzYjll MDNjMzZlZmIzYWQ3NjYxMjhiZjg0Y2U1MzE0MjUyMjBhNWEwMzJlYzUwZjc0 CFOs are more optimistic about the U.S. economy, according to Grant Thorntons 2022 Q4 survey, as they push for growth while being judicious about costs. When policy shifts, our insights and analysis can help you plan and respond. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. On April 29, California Gov. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. ITIN taxpayers who also qualify for the California EITC would receive a total of $1,200. Sec. Additionally, A.B. Yjk1NTlhZjUzMmI3ODFlN2VlZDM3OWQ5OWM1ZDgzYmM3NTgyMWVkZjViZTQy Section 636(a)(37)(A)(iv)(bb), which requires the entity tohave experienced at least a 25% drop in gross receiptsinthe first, second or thirdquarter of 2020, or the fourth quarter if a PPP loan application was submitted on or after January 1, 2021,compared tothe same quarter in 2019. 162 and 163) will be disallowed to the extent PPP loan proceeds are ultimately forgiven.5 Later in 2020, the IRS issued Revenue Ruling 2020-27 further explaining that taxpayers cannot deduct expenses paid with PPP loan proceeds if the taxpayer reasonably expects forgiveness of the covered loan regardless of the year when forgiveness occurs. The documentation must clearly identify both of the reference quarters (if not using annual comparison), must On June 30, 2022, AB 194 was enacted which allowed an income exclusion for covered loan amounts forgiven pursuant to the Paycheck Protection Program Extension Act of 2021 (PPPEA)(Public Law 117-6). The California Franchise Tax Board (FTB) plans to issueguidanceexplainingqualification and other requirements with respect to AB 80, and it is expected to include guidance for taxpayers that have already filed 2020 California individual or corporate tax returns. This measure is part of Californias effort to recover now that the pandemic is easing, state restrictions are lifting, and businesses are moving back towards full operations. These pages do not include the Google translation application. The agreement provides $600 in one-time relief to households receiving the California EITC for 2020. From child care, relief for small business owners, direct cash support to individuals, financial aid for community college students and more, these actions are critical for millions of Californians who embody the resilience of the California spirit., Were nearly a year into this pandemic, and millions of Californians continue to feel the impact on their wallets and bottom lines. AB 80 uses the same 25% gross reduction threshold qualification that was used for second draw PPP loans. DTTL and each of its member firms are legally separate and independent entities. He has 22 years of broad-based SALT consulting experience at the national and practice office levels in large public accounting firms. The 25% gross receipts limitation does not apply to the EIDL advance grants, so taxpayers may exclude the EIDL grants and may fully deduct these expenses even if they dont meet the threshold reduction. SESS. Borrowers that need assistance or have questions should call the SBA at (877) 552-2692, Monday - Friday, 8 a.m. - 8 p.m. EST. How to solve business problems and mitigate the risks, Make your transformation deliver on its promise. Otherwise . For additional information on the RRF grants, visit Section 5003 of the ARPA, RTC 17158.2(a), and SBA guidance. Here are key facts about the PPP forgiveness process and how it impacts business owners owing less than $50,000. REV. Executives are advised to pay special attention to emerging trends that will shape how boards and investors talk about ESG in 2021. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year. More than 750,000 PPP loans were taken out by California small businesses. REV. Banks face new challenges on regulation, ESG, mortgages, digital assets, audit, tax or digital transformation in 2022. 116-136. 276 0 obj <> endobj Separately, the Governor and legislative leaders said that discussions are continuing on measures for the safe reopening of the states K-12 schools, including strategies to address learning loss caused by the pandemic. Generated by Wordfence at Sat, 4 Mar 2023 17:56:41 GMT.Your computer's time: document.write(new Date().toUTCString());. Gavin Newsom signed Assembly Bill 80 (A.B. endstream endobj 277 0 obj <. Do not include Social Security numbers or any personal or confidential information. OTc5MjdiOWVmNjcwMzYzYTRjZjhmOWI1YmQzZDczMDNkYzZmYjk2Mzk2ZWJi (HTTP response code 503). 1577, 2019-2020 REG. US affiliates to deem to elect waters edge, California legislature allows group returns for international business travelers. MWRkNGI5MjIxZWY4NWUwMzU3N2Y0MDFmODQ1ZmQzMjliYzI1YWJjM2E3OGU2 Review the site's security and confidentiality statements before using the site. Gavin Newsom signed Assembly Bill 80 (AB 80), which generally conforms to the federal income tax treatment of Paycheck Protection Program (PPP) loan forgiveness and of the deductibility of expenses paid with a PPP loan that is forgiven, with a notable exception. There's more to consider. 1577, 1-3 (stating that [t]his act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect). 20 See A.B. SESS., 1 (see new CRTC 17131.8(a)), 2 (see new CRTC 24308.6(a)). ZTg2N2Y3NGIyZGIwODA1ODY4OWI3ZDYzNWNjOTk5OTUyZmU4YTllMzc2OTVj The American Rescue Plan Act (ARPA) (Public Law 117-2) was enacted on March 11, 2021. The agreement also partially conforms California tax law to new federal tax treatment for loans provided through the Paycheck Protection Plan, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. of research and economic analysis. The owner of this site is using Wordfence to manage access to their site. To qualify for expense deductions, basis adjustments, and lack of reduction of tax attributes related to an SOV grant under SB 113, you must meet the following qualifications. At Grant Thornton, we dont just understand your business. KServicing stated they were 1.) The treatment of deductions, basis, and tax attributes for California income tax purposes may differ from the federal income tax treatment. NDQyOTJlYTVmOTZkMzNjMTFiNDZlY2VjNjdlMmViOTViNWVlZmRkMzIyZWNl COVID-19 has caused PE firms to adjust their valuation practices postponing valuations to avoid reset triggers, exploring new approaches to valuations or diversifying existing ones. hbbd```b``Z " e1} Dl` ,r`BD* - hcHh]bo O>? An additional $310 billion of PPP loan funding was subsequently provided by the federal Paycheck Protection Program and Health Care Enhancement Act (P.L. Read about the challenges and opportunities that could lie ahead. No Results Found. ZTI5MDAwNDczOWI5MWMxY2RlNWVhNzcyY2Q3OWVmNmI2N2Y2ODEyZmM1NTYz In addition, the following provision is included in the agreement: The agreement restores previously enacted reductions, effective July 1st, for the University of California, California State University, the Judicial Branch, Child Support Services and for moderate-income housing. We do not control the destination site and cannot accept any responsibility for its contents, links, or offers. Illinois Governor J.B. Pritzker signed new legislation (P.A. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year. SESS. If you have any issues or technical problems, contact that site for assistance. 21-17) does not apply to either first- or second-draw loans received after March 31, 2021. Impacted by California's recent winter storms? & TAX. 39 (A.B. SESS., 1 (see new CRTC 17131.8(b)), 2 (see new CRTC 24308.6(b)). On February 9, 2022, Senate Bill (SB) 113 (Economic Relief) was enacted to allow an income exclusion for Shuttered Venue Operator (SVO) grants provided under CAA for tax years beginning on or after January 1, 2019 and for Restaurant Revitalization Fund (RRF) grants provided under ARPA for taxable years beginning on or after January 1, 2020. For tax yearsbeginning in2019,qualifyingtaxpayers cannowexclude PPP loanforgivenessorEIDL grants fromCalifornia gross incomeanddeductallowablecoveredexpenses paid withPPP loan or EIDL grant proceeds. See Terms of Use for more information. All references to Section, Sec., or refer to the Internal Revenue Code of 1986, as amended. The undersigned certify that, as of July 1, 2021 the internet website of the Franchise Tax Board is designed, developed and maintained to be in compliance with California Government Code Sections 7405 and 11135, and the Web Content Accessibility Guidelines 2.1, or a subsequent version, as of the date of certification, published by the Web Accessibility Initiative of the World Wide Web Consortium at a minimum Level AA success criteria. The agreement provides roughly $6 million to support outreach and application assistance to University of California, California State University and California Community College students made newly eligible for CalFresh the state-administered federal program for supplemental food assistance. REV. -----END REPORT-----. (CAL. M2EzM2JjMzhiMzQ0OGJhZjM2Y2YwYzkiLCJzaWduYXR1cmUiOiIzZWNjNmEy 1 A.B. 311 0 obj <>stream NThmOTI5NTJhNjc1MTk0MWYwNDRhODc5Yjk0NWRlY2MxOGViMzcwMTViODJl Together with PitchBook, we give you the focused insights to take advantage of the trends. Fullwidth SCC. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. The agreement would provide the $600 payments to households with ITINs and income below $75,000. 0 hb```b``V``e``[ ,@QR40 Mjy{zf9sUnhRn(=vl&G99I\@V7?$vt0Ft 0AU:\l0 c`\=H$X$BCA~'YlxH/t>x 636(a)(37)(A)(iv)(I)(bb). California law excludes PPP loans forgiven under the CARES Act from gross income has been saved, California law excludes PPP loans forgiven under the CARES Act from gross income has been removed, An Article Titled California law excludes PPP loans forgiven under the CARES Act from gross income already exists in Saved items. Be ready to demonstrate diligence for the FCPA. On September 9, 2020, Californias Governor Newsom signed Assembly Bill 1577 (A.B. Specifically, the new law states that [a]ny credit or deduction otherwise allowed under this part [(Part 10 for the PITL and Part 11 for the CTL)] for any amount paid or incurred by the taxpayer upon which this exclusion is based shall be reduced by the amount of the exclusion allowed under this section.19. Dana is based in San Jose, California. Companies must focus on attracting and retaining talent, modernizing HR to serve new business needs while becoming more efficient. This material may not be applicable to, or suitable for, the readers specific circumstances or needs and may require consideration of tax and nontax factors not described herein. 116-260. & TAX CODE 17024.5(a); 23051.5(a). You will then receive an email that helps you regain access.