April 7, 2020
Late last night, Guidance was provided by the Department of Treasury stating that when PEO clients are applying for the Paycheck Protection Program (PPP) lenders must accept payroll data provided by a PEO, and can’t turn down a borrower due to lack of a IRS Form 941. The language further states that lenders do not need 941s or other tax documents from a PEO client in order to qualify for a PPP loan. Click here to read the U.S. Treasury language.
Specifically, see question 10 –
Question: What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?
Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data on the Employer Identification Number (EIN) of the PEO or other payroll provider. In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.
We suggest you consult your accountant, CPA or attorney before deciding what path is best for you and your business. If, after consulting your accountant/CPA/Attorney, you decide that you would like to apply for the Small Business Administration (SBA) Paycheck Protection (PPP) Loan, please contact our Corporate Office and we will provide you with a comprehensive package of documents to take to your lender to help streamline the process when applying for the PPP loan. At Unique, we want to go above and beyond to assist our clients during this difficult time.
For more information about COVID-19 laws, regulations and provisions, click here.