PPP Forgiveness vs. Unforgiveness
Companies that qualified for the Paycheck Protection Program (PPP) can still take advantage of the ERC credit. However, if a company has received PPP funds, they can't use the same dollar for dollar funds for the ERC, i.e. there is no double-dipping. We take this into account when calculating your ERC credit. If the PPP remains unforgiven, we won't factor the PPP loan amount into the analysis.
PPP Loan Forgiveness
When a company has received forgiveness of the PPP loans this will impact their total ERC refund amount. We will need to deduct between 60%--100% of their PPP loan, depending on IRS guidelines.
Acme Pimple Remover is getting $200,000 in employee retention credits. However, they received a PPP loan of $50,000 with a loan forgiveness because they used 60% of their PPP loan for payroll. However, as double dipping is not allowed, the IRS guidelines requires us to remove at least 60% of their loan (this could be more). This means that we would subtract 60% from the $50k to calculate the final amount of the ERC return.
.6 x $50,000 = $30,000.
Next, subtract $30k from $200k to get $170k in ERC credits due to the customer.
PPP Loan Not Forgiven
If the customer has received a PPP loan(s) and has not paid it back then the PPP amount is not figured in our analysis. When the IRS issues the ERC credit they will deduct this amount from the client's qualified ERC refund amount.