CPAs Beware: Some CARES Act and FFCRA Incentives Don't Play Well Together

Connections Magazine

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The landmark CARES Act, signed into law by the President on March 27, provides many em­ployers with several options to increase liquidity and cash flow during the time of the COVID-19 pandemic. And only 9 days be­fore that legislation was enacted, the Families First Coronavirus Re­sponse Act (FFCRA) also created two other payroll tax-related in­centives for certain employers, and to self-employed individuals.

The incentive receiving the most attention, both here in Alabama and across the country, has been the Paycheck Protection Program (PPP) administered by the SBA in cooperation with private banks. As our friend Tom Zoebelein points out in his thorough article begin­ning on page 9, these loans can become (federally) tax-free grants if the borrower expends a certain percentage of the loan funds on qualifying expenses, particularly payroll, maintains good docu­mentation, and then applies for and receives written forgiveness from the lending bank. 

The complete article, "CPAs Beware: Some CARES Act and FFCRA Incentives Don't Play Well Together," was published in the May–June 2020 issue of the Alabama Society of CPAs' magazine ConnectionsThe full version of the article can be found here.