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PPP Loan Update - PPP Flexibility Act Passes The Senate, PPP Is Still Taxable - YouTube
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Hey there everybody. Today is Thursday
June 4th and we have some really good
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news today.
The PPP Flexibility Act has passed the
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Senate. Before I move on I want to ask
you all to subscribe to my channel and
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smash that like button. Because I want to
get this video to as many people as
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possible that need this information. So
in this video we're going to briefly go
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over the PPP Flexibility Act and what
that and what it is just case you don't
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know. And the things that you should be
doing in the next couple of weeks while
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waiting for new guidance and new rulings
if this Act passes. And also we're going to
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review a little bit about the taxability of the PPP loan. So, the
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PPP Flexibility Act passed the Senate. It
passed the House last week I believe, and
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just last night it passed the Senate. So,
now it's on to the President for his
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signature. Now remember, it's still a bill.
It's not into law. It hasn't been
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signed into law yet until the President
signs it. So, treat it as a bill. And you
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know, it's very possible that by
the time you're watching this video it's
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been signed into law. Since it passed the
House and the Senate, I think it's very
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likely that President Trump will
sign into law. And if he doesn't you can
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come and slap me in the face. Okay so, what is the PPP Flexibility Act? The first big
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thing that this Act does is it changes
the covered period of the PPP loan from
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8-weeks to 24-weeks. That means it
gives you 24-weeks to spend the money
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instead of 8. And this is going to be a
huge help for business owners that have
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had their businesses shut down during
the pandemic. The next thing it covers is
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changing your payroll cost limitations
from 75% to 60% minimum.
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So, we're all really very familiar with the
75% payroll rule where you have
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to spend at least 75% of your PPP loan
on payroll. But now, it's changed to 60%.
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And Senator Marco Rubio has
mentioned that in order to qualify for
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any forgiveness at all you have to meet
that 60% threshold. I think this
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was a change that was made
late in the House vote. Because in my last
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video when I looked at the bill, it didn't
have a 60% rule. It just said, it just
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eliminated the 75% rule all together. But,
now in the updated bill it does have a
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60% rule. So, this might have been
changed late in the House vote. The
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third thing that this bill covers is
extending the time that you have to
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re-hire or replace any employees that you
laid off. So before, you had until June
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30th 2020 and now you have until
December 31st 2020. This gives people a
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better chance to re-hire their employees
so it doesn't affect the forgiveness.
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Especially if their employees are
currently taking unemployment. This is,
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this I think is one of the biggest
things that could help businesses.
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Besides from changing it from the 8-weeks to 24-weeks. Because there was so
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much conflict with employees not wanting to go back to work because they're
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getting this great unemployment benefit.
So, now giving employers until December
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31st that is great news. The fourth thing this bill changes is increasing the time that
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you have to pay back the loan if you
don't get a portion of it
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forgiven. It changes that from two years
to five years. So, that makes this
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loan a little bit more manageable.
Because two years is a pretty short term
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even if it's 1% Interest. Five
years makes it a little bit more
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manageable in my opinion. But
hopefully with a good CPA you can, you
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should be able to get all of it forgiven.
Now what we will have to
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see if this bill will change, is the
self-employed compensation calculation.
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Because as you know, right now
self-employed individuals have a very
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strict calculation on how much of their
PPP loan would be considered "salary"
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since they're self-employed. You don't
technically have a W-2 salary. So, there
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is a strict 8-week calculation that
you use to calculate that. So, we'll have
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to see if that changes with this bill. In
my personal opinion and how I interpret
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the bill and the law I don't think
that's going to change. And I don't think
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it's going change where owner employees can increase their
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salary just to get more of the loan
forgiven. I don't think that's going to
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change either. But we'll just have to
wait and see. So, what should you do right
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now? Remember, it's still a bill it's not
law yet. So, I would just hang tight. You
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know, act as if this has not passed yet
because it hasn't. And then when it does,
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you can expect there's going to be a lot of
questions and a lot of confusion. Because
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this shit's changing all the time. So
when it does pass, the Department of
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Treasury will likely issue an interim
ruling that provides specific guidance
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for this. For the forgiveness of the PPP.
For the updated forgiveness of the PPP.
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You might have a lot of questions about
that. Just be sure to ask your CPA or ask
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me in the comments below. I'll do my best
to interpret the bill and to answer your
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questions. But if I can't then I'll
probably have to wait until the
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Department of Treasury issues an
interim ruling. Another thing you should
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do is if you are a business that has
been shut down for a while and you got
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the PPP, don't return your loan. Because
this will most likely really benefit you.
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So just hang tight with your loan. If you
had doubts about it, don't return it. Keep
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it and we'll move forward if or when
this bill passes. And lastly, if you are
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about to submit a PPP forgiveness
application and you're unsure about some
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of the expenses you claiming on there. Or
unsure of what was considered salary on
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there. Don't submit it yet. Because the
application will likely change. And with
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the increased covered period you'll be
more likely to be eligible for
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forgiveness, given the expenses that you
can cover with this loan. That's all I've
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got on the PPP Flexibility Act. I just
wanted to touch briefly on the
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taxability of the PPP. We've covered this
before, I just want to remind you that
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when you get the PPP and you cover
payroll costs and utilities and all that
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stuff with the PPP, and let's say your
PPP gets forgiven, those expenses that
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you covered with the loan are no longer
deductible.
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And that is written in the tax code. It's
a very old tax code. But it just
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means that any expenses that are
covered by non-taxable income, and if
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this PPP is forgiven it is considered a
non-taxable income. But any expenses
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covered by non-taxable income for a
specific use like this loan has, cannot
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be deductible on your taxes. Any way you
look at it any way you slice the pie, it
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does mean that the PPP is taxable. You
know, Congress originally said that it
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wasn't and then the IRS issued a
reminder basically saying that oh yes it
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is taxable. So what's going on now is
last month the Senate introduced a bill
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called the Safeguarding Small Business
Act that's supposed to change the CARES
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Act and make sure that any deductibility
of expenses is not affected by PPP
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forgiveness. So basically, the Senate issued a bill that will basically say screw you IRS.
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These expenses will be
deductible because that was our original
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intent. But, that bill was introduced over
a month ago and it hasn't seen any
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movement. It hasn't been passed by the
Senate or the House or nothing. It's just
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been introduced. So, I'm going to be watching that bill closely and update you on the
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changes of that. If you want to look it
up yourself it's bill S3596 ,
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the Safeguarding Small
Business Act. That's all I've got for today.
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Let me know if you have any questions or
comments or concerns in the
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comment section below. Please smash that like button. Please subscribe to my
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channel. I really appreciate you. I
appreciate your support. I really do look
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forward to getting up every morning and
doing these and helping you guys out.
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So thank you for your support. I'll see
you next time. Stay safe out there and
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take care.
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