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PPP Guidance on Hazard Pay, Bonuses, and Employees Who Decline to Return

AAFCPAs would like to make clients aware that the Small Business Administration (SBA) released an interim final rule on May 22nd confirming and clarifying a few points related to the Paycheck Protection Program (PPP) forgiveness calculation.

Hazard Pay & Bonuses

On page 11 of the interim final rule, the SBA clarifies that bonuses or hazard pay CAN be eligible for forgiveness so long as they do not exceed the annualized $100,000 compensation limitation per person.

Employees Who Decline to Return

As a reminder, within the Application & Instructions released on May 15, 2020, the SBA introduced exceptions to forgiveness reduction ratio calculations for borrowers who have been unsuccessful in bringing employees back after a layoff due to various reasons. On page 14 of the interim final rule, the SBA provides specific guidance for how employers who would like to take advantage of the forgiveness ratio exception, including documentation requirements. This includes informing the state unemployment agency of the employees’ rejected offer of employment within 30 days of the rejected offer.

AAFCPAs encourages clients to reassess and forecast payroll costs eligible for forgiveness.

How May AAFCPAs Help?

We advise borrowers to reach out to your AAFCPAs Partner to discuss your particular facts & circumstances so we may ensure you remain in compliance while maximizing your opportunity for debt forgiveness.

  • Utilizing our internal expertise and calculator tool, we can assist with forecasting and modeling the PPP loan forgiveness calculation which will include scenario planning and strategies to maximize the forgiveness amount.
  • We assist with monitoring of actual costs to planned costs over the 8- or 24-week period.
  • We provide guidance on optimizing application of costs to various sources of funding received.
  • We provide assistance with the preparation of the final PPP Loan Forgiveness Calculation.
  • We review management-prepared loan forgiveness calculations and provide guidance on compliance and maximizing debt forgiveness.

If you have any questions, please contact Brittany Besler, MBA, CPA, Esq. at 774.512.9001, bbesler@nullaafcpa.com; or your AAFCPAs Partner.

About the Author

Brittany Besler
Brittany possesses a unique combination of tax, legal, and business backgrounds, and is a valuable member of AAFCPAs’ Tax practice. She provides tax planning, research, and compliance solutions for corporations, partnerships, nonprofits, individuals, estates & trusts. Brittany advises businesses and individuals on various federal, state, local and foreign tax-related issues, including counseling clients on the consequences of new and updated tax laws. She assists clients in the creation of appropriate and optimal organizational structures, and advises on tax planning and tax exemption compliance. She advises newly-formed and well-established nonprofit clients on meeting compliance requirements of various government agencies, including the IRS rules on fundraising and political activities.