global Tax Rhode Island DOT Releases Guidance on Filing Taxes on PPP Loans July 28, 2021 If you received loan forgiveness for a PPP loan exceeding $250,000 in 2020 and have already filed your 2020 RI return, you may need to amend your return. Read about this change here. Rhode Island businesses…did you take out a Paycheck Protection Program (PPP) loan in an amount exceeding $250,000? Under a new state law, gross income now includes the amount of any PPP loan forgiven that exceeds $250,000, meaning about 2,000 businesses may have to file amended returns. We have the details here. PPP refresher The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) offers many provisions to assist companies impacted by the COVID-19 pandemic, including the Paycheck Protection Program. Visit our PPP Headquarters for all the details on the three rounds of PPP funding. What’s new in RI? Legislation recently approved in the 2021 session of the General Assembly and signed by Governor Daniel J. McKee, stipulates that gross income now includes the amount of any PPP loan forgiveness that exceeds $250,000. The Governor's original proposal was $150,000, but that was increased to $250,000 with the final passage of the bill. This means that businesses with forgiven PPP loans of more than $250,000 must file amended returns to account for the taxable portion of the forgiven loan. Here's an example of how the new law works - If you received two loans, one for $250,000 and the other for $275,000, you are not responsible for state taxes on the first loan since it is within the threshold. You ARE responsible for state taxes on the $25,000 above the threshold on the second loan. When must taxes be paid? The Division of Taxation (DOT) will waive interest and penalties on the tax owed related to the taxable portion of each impacted PPP loan for tax year 2020,if the tax is paid in full by March 31, 2022. Any extensions available? As of now, the guidance does not address hardships or extensions for businesses that cannot meet the deadline. It is does not appear at this moment that the March 31, 2022 date extends to 2021 quarterly estimated payments or other taxes that may result from the changes. As of now, it looks like the DOT will only waive interest and penalties associated with the tax owed on forgiveness income. Note that the guidance applies to 2020 tax returns, not tax year 2021. What actions should I take to amend my return? The Division of Taxation plans to issue updated forms with instructions for making tax payments on the taxable portion of forgiven loans as soon as possible. Tax preparers are hopeful the forms and instructions will be provided to businesses by early fall (ahead of the September 15th and October 15th deadlines). As further guidance is issued, we will keep you updated. Questions? Contact us.