Information Reporting Requirements for PPP Loans

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows qualifying small business owners to receive Paycheck Protection Program (PPP) loans in order to stay in business and pay their employees during the Coronavirus epidemic.  Recipients of these loans are eligible for forgiveness of all or a portion of these loans if the loan proceeds are used in accordance with the CARES Act. The IRS has issued Announcement 2020-12 which provides that lenders who make PPP loans that are later forgiven under the CARES Act should not file information returns or furnish payee statements to report the forgiveness.

On September 22, the IRS announced that lenders should not file information returns or furnish payee statements under tax code Section 6050P to report the amount of qualifying forgiveness with respect to covered loans made under the Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA). When all or a portion of the stated principal amount of a covered loan is forgiven because the eligible recipient satisfies the forgiveness requirements under Section 1106 of the CARES Act, an applicable entity is not required to, for federal income tax purposes only, and should not, file a Form 1099-C information return with the IRS or provide a payee statement to the eligible recipient under Section 6050P as a result of the qualifying forgiveness, the IRS stated. A filing could result in an under-reporter notice being issued, the IRS cautioned