In early July, the IRS issued a new procedure that can extend the portability of estate tax for up to five years after the death of a spouse. 

What is a Portability Election? Portability Election is a method to prevent any applicable exclusion not used by a decedent with a surviving spouse from being lost. If an estate makes the portability election, any unused exclusion at this first death is made available to be used by the surviving spouse and, or their estate for subsequent transfers. No transfer taxes will be due on any amounts transferred to the decedent’s surviving spouse.

Why did the IRS Make the Change? Due to receiving a number of requests for those who could not meet the 2-year deadline, the IRS decided to extend the deadline. This decision was not only to extend this relief to five years but to make certain changes to reduce the number of PLR requests the agency receives.

What are the Impacts on the Surviving Spouse? If the 706 is filed promptly, the surviving spouse will receive the unused exclusion (DSUE)  amount from the deceased spouse for application on the surviving spouse’s transfers that were made on or after the date of death. If the surviving spouse had made taxable gifts before the estate took advantage of the relief and had to pay a gift tax transfer, then the surviving spouse may file a claim for a refund of the gift tax that the DSUE would have offset. The same can be done with paid estate tax returns of the surviving spouse. However, suppose the surviving spouse’s applicable exclusion amount, caused by the addition of the decedent’s DSUE as of the decedent’s date of death, results in an overpayment of gift or estate tax by the surviving spouse or their estate. In that case, no claim for credit or refund may be made. Something to keep in mind is that if a surviving spouse files a claim for a refund before filing Form 706 under this Revenue Procedure, that filing will be treated as a protective claim for a refund. 

Do I Qualify? This relief is available to the executor of a qualified estate or, if no executor has been appointed, a “non-appointed executor” as provided for in the regulations at Treasury Regulation. To be able to take advantage of this relief, the following conditions must be met:

  • The decedent was (1) survived by a spouse, (2) died after December 31, 2010, and (3) was a citizen or resident of the United States on the date of death
  • The executor was not required to file a federal estate tax return based on the value of the gross estate and adjusted taxable gifts and without regard to the need to file for portability purposes
  • The executor did not file an estate tax return within the time required by section 20.2010-2(a)(1) for filing an estate tax return
  • The executor files Form 706 under the procedures outlined in this Revenue Procedure to make a late portability election.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees, and court costs can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

From Olympic medals to national championships, the world of elite sports is full of inspiring stories of hard work and determination. Similar to the career of an entrepreneur, success in this profession doesn’t come easy. Being a star player often requires long hours, creative thinking, and commitment to the team. Although physical talent is key to an athlete’s success, their mindset is even more critical and can teach entrepreneurs a few lessons on how to be equally victorious in the board room.

Continue to set goals and improve. Plateauing is both an athlete’s and an entrepreneur’s worst enemy. An athlete must set performance goals and create a plan to achieve new career milestones. Consistent practice and self-evaluation allow them to perform their best as a competitor. Likewise, entrepreneurs should set overall goals to keep their businesses moving in the right direction. They should focus on making a game plan that will help them improve as they continue to grow. Breaking their overall goals down into micro-goals is one way they can make tracking their progress more manageable.

Don’t be afraid to take risks. Most successful athletes did not get where they are by playing it safe. Risk and reward often go hand in hand, so pushing that extra mile or taking that final shot are what differentiate elite athletes from the average player. Finding a balance between risk and recklessness is also critical for entrepreneurs. Being too scared of change will inhibit growth, and changing too much at once will cause failure. Calculated risks are the solution to keeping a business ahead of competitors while taking potential concerns into account.

Keep your head in the game. The greatest athletes in the world are also recognized as leaders. Their hard work, ambition, and drive are qualities any director, CEO, or business influencer can aspire to possess. If an athlete makes a mistake, being able to separate their failures from their present performance allows them to continue reaching for success. Entrepreneurship may be one of the most challenging business environments, but business owners must maintain a level head throughout the ups and downs. Entrepreneurs need to stay confident in themselves even when the odds are stacked against them.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.

Data collected in November 2021 from a survey of more than 10,000 knowledge workers offers a snapshot of just how popular hybrid arrangements have become. In the survey, about 95% of people want flexible hours, compared with 78% of workers who want location flexibility. Many people would rather work whenever they can than at home or in an office. The survey also found that 72% of workers who were not happy with their level of flexibility, time, or location, are more likely to seek out a new opportunity in the next year.

Many employers have reluctantly embraced long-term hybrid and remote work arrangements after repeatedly postponing return-to-office dates or finding that workers pushed back on going to the office. That has some executives thinking differently about in-person arrangements. Some employers believe that their workers should meet in person only for necessities. Employers are also seeing agreements between team members about when people in the group will work are growing in popularity. Many also believe flexible schedules are likely to endure beyond the pandemic.

The Future Forum survey, which was conducted between Nov. 1 and Nov. 30, also found that the share of people working in hybrid models, where they split their time between an office and a remote location, increased by 12 percentage points since May, as more workers have returned part-time to their traditional workplaces. More than two-thirds of those surveyed said a hybrid setup was their preferred working method. Many workers have found their productivity surged while working from home, and they achieved the work-life balance they had been seeking. 

While many large companies have decided that most of their employees will combine remote work with in-office days, hybrid work has downsides. Executives have growing concerns that hybrid work could increase inequity among rank-and-file employees, especially women, working mothers, and people of color, who said they were more likely to prefer flexible arrangements when surveyed. Among executives surveyed, 71% said they work in the office at least three days a week; 63% of non-executive employees said they go in just as often. Executives working remotely were far more likely than non-executives to say they wanted to work at least three days a week in the office. Some employers have concerns about large meetings since it will be harder to conduct if some people are in the office and some are remote. Many people inside companies complain about the lack of energy in the workplace when it is sparsely populated. Forcing a one-size-fits-all solution across a large workforce can also seem risky to managers.

Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on to the next generation the assets and wealth that you have worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you, your family, and business. For more information, contact us today.

As we enter the third year since the start of the pandemic, mandatory in-person work seems a little outdated for most companies. A hybrid work environment, deemed necessary during the pandemic’s worst days, has now opened new possibilities for firms in terms of how they hire, manage, and retain staff members. Although many questions remain, ranging from why hybrid work is vital to how managers can best work with these new types of geo-friendly employees, to what exactly this new hybrid workplace looks like. Some even question whether a new hybrid work environment is as important as everyone says. After all, those who want to return to the office are largely able to these days, as a “return to normal” is not only wanted but needed in many businesses.

However, remote work continues to be an undeniable part of today’s workforce. A 2022 survey from payroll and HR technology provider Gusto, found that the number of fully remote workers in the U.S. has increased 240% since 2021. Furthermore, every state has seen at least a 10% year-over-year increase in its share of remote workers, and nearly 60% of companies now have at least one remote worker. So, it’s important to note that while traditional in-person work is by no means obsolete, the option of hybrid work is not going away any time soon. A lack of hybrid work options might even be costing accounting firms talent, to boot. No matter where a company stands on hybrid work issues, it is vital to let policies of hybrid working environments be explicitly known to staff members to avoid confusion on where the company stands or will stand going forward.

Everywhere, all at once. The massive geographic expansion of the job candidate pool is an ongoing silver lining of the sudden hybrid work revolution. For example, a modestly sized regional accounting firm now has the power to recruit professionals from outside their immediate area and will continue to have that power long after the pandemic is over. In other words, finding that perfect candidate has gotten a whole lot easier. Physical office spaces, too, are transforming — both in terms of where they are and what they are meant to ultimately represent. Firms who have adapted the hybrid work have seen that their workforce is more connected when not limited to the confines of the physical office space. So, while a reduction in physical office space may have been initially seen as a negative in the wake of the pandemic, it may actually present a unique opportunity to expand a firm’s footprint and services across the country.

Onboarding here, there, everywhere. This is not to say that the hybrid work environment is not without its challenges. Onboarding candidates in a remote setting is a relatively new way of doing things, especially for a process that is supposed to act as an in-person welcome to the team. But the process certainly is not impossible and has some hidden benefits. For all onboarding, firms have to give up the all-in-person or 3-D paradigm, leverage remote tools and resources for some of it, and offer in-person elements when it makes sense. Firm managers must also be adaptable in their onboarding process,  ensuring that remote candidates have their voices heard as they navigate nontraditional means of joining the team. Candidates should also know how to make a unique impression with their new team since their physical location should not hinder their responsibilities or impact collaboration with their new coworkers.

Stick around. Once a hybrid candidate has cemented themselves in their role, another question arises on how to best keep them at the firm. After all, if they are free to work for a number of hybrid-friendly companies not bound by location, why should your firm be their pick? The answer lies in working with the candidate as an individual, offering a tailored schedule anchored in constant communication that allows them to work to their own personal best. While traditional retention practices also have not completely vanished — they have just been modernized for the hybrid work environment. Regular meetings and communication still very much fuel successful teams; it is just up to managers to determine their location and frequency.

A ‘new normal.’ Much ink has been spilled on the importance of the hybrid work revolution and the “new normal” of work moving forward. Whether one regards it as a flash in the pan or a sea change in how business is done, firms must simply see the opportunities that the hybrid work environment offers them on an individual basis and ponder how exactly to maximize the benefits of this newfound freedom in the workplace.

Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on to the next generation the assets and wealth that you have worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you, your family, and business. For more information, contact us today.

Wealthy investors may face new restrictions when transferring assets to heirs, due to a recent proposal by the Treasury Department. The Department stated that it would “claw back” the tax savings of several wealth planning strategies come 2026 when historically high exemption levels for gift and estate taxes are due to be sliced in half. The proposal reflects the Biden administration’s concern that affluent Americans are racing to use clever strategies during the window to create “artificial” gifts to pass on tax-free wealth to future generations. The proposal targets strategies in which a taxpayer gives assets to a beneficiary while maintaining control over a substantial interest in them. These strategies are what the IRS considers to be a disguised gift that is taxable. It is a fresh blow to affluent investors and their advisors who thought their careful plans were laid in stone. 

Under scrutiny. One arrangement in the crosshairs is a partnership in which a regular interest is given to an heir while the donor retains a preferred interest. Another scenario concerns a promise by a donor to make gifts to a recipient in the future. A third example involves a trust to which a grantor transfers assets but also receives income from the gifted property. In all three instances, the moves use up some or all of a donor’s exemption, which this year is just over $12 million, $24 million for married couples. These higher levels, a product of the 2017 tax-code overhaul, will fall roughly by half come 2026. The Treasury proposal would claw back taxes on transferred amounts that exceed the lower exemption levels for people using the strategies who may die that year. The lifetime gift and estate tax rate is 40%. The goal of this is not to allow wealthy taxpayers to lock in the currently high use-it-or-lose exemption amount.

GRATs. A common estate planning technique, Grantor Retained Annuity Trusts (GRATs), may also get caught even though the strategy does not technically involve artificial gifts. Under the Treasury’s proposal, the IRS would calculate the tax bill of a donor who retains an interest of more than 5% of the value of assets they transfer to a GRAT under the lower exemption. If the donor dies before the trust’s term ends, their stake is pulled back into their estate, resulting in a bigger tax bill on assets they thought they had moved out. For example, suppose a donor put $100 million into a GRAT for the benefit of their children last year, under IRS rules. In that case, the trust pays them a yearly “annuity” that totals slightly more than the value of the contributed property or cash over time. In the eyes of the tax agency, the paybacks reduce the taxable value of the gift, say in this case, to $10 million. So the donor has shifted $100 million out of their estate to benefit their kids but used up only $10 million of her current exemption. Meanwhile, the trust appreciates, and its gains go to the children tax-free. Under the proposal, because the taxable value of the gift is more than 5% of the transferred amount, the donor has not locked that $10 million of their currently higher exemption. Meaning they would thus face a higher tax bill come 2026. One big issue is that the strategies on the firing line are irrevocable. They are legal contracts that cannot be unwound. 

Saved by Zero. However, there seems to be a silver lining to the 5% rule. It will not apply to so-called zeroed-out GRATs, in which annuities equal the original value of what was put into the trust. This is because, under current IRS rules, such a trust does not use up any of a donor’s exemption, even as it moves money out of the estate. Assets in that trust, a staple with the 1 percent, appreciate over time, and the left over after annuities goes to heirs tax-free. The proposal also does not affect nuts-and-bolts planning in which a donor bequeaths property while keeping control or possession of it while alive. For example, suppose Grandma and Grandpa have an estate worth $20 million and set their son up to inherit $7 million when they die. In that case, they can safely use their current exemption of over $24 million if they pass away after 2026.

The 10-year itch. Wealth advisors are already chafing from severe curbs on inherited retirement accounts. Under a law that Congress passed in 2019, heirs to traditional individual retirement accounts (IRAs) and workplace retirement plans, including 401(k)s, 403(b)s for educators and 457(b) deferred compensation plans, can no longer “stretch” required minimum withdrawals out over their lifetimes. Instead, they have to drain the accounts within ten years. In May 2021, the IRS said that beneficiaries of the accounts were not required to take annual distributions before the 10-year deadline. Advisors breathed a sigh of relief because it gave the tax-deferred accounts more time to appreciate. But on Feb. 23, Treasury reversed course, issuing another little-noticed proposal to require minimum annual distributions in years one through nine. That rule applies to heirs who are not spouses or children under age 18 and inherit a retirement account starting in 2020. However, this does not include Roth Plans.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

The high court issued an order on Monday, April 18, 2022, denying the request from New York, New Jersey, Maryland, and Connecticut to review a decision of the U.S. Court of Appeals for the Second Circuit regarding the SALT deduction cap. The appeals court rejected several state legal arguments against the cap, including that it unconstitutionally coerces the states to abandon their preferred fiscal policies. The cap generally blocks taxpayers who itemize federal deductions from deducting more than $10,000 per year for paid state and local taxes, including property taxes and either income or sales taxes.

The states argued that the cap unconstitutionally interferes with their sovereign authority to levy and collect property and income taxes. The Second Circuit rejected their arguments, finding that neither Article I of the Constitution nor the 16th Amendment bars Congress from curtailing the SALT deduction, even if citizens in certain states will pay billions of dollars in additional federal taxes. The appeals court ruled that such injuries are not significant enough to be coercive under the Tenth Amendment. Joe Bishop-Henchman, vice president of tax policy and litigation at the National Taxpayers Union Foundation, noted the states’ petition was meritless. Nothing about a deduction for the 12% who still itemize is constitutionally mandated. While it is true that high taxes can harm competitiveness, New York should solve the problem in Albany instead of in the federal courts.

When the SALT cap was enacted, there was no serious debate over its constitutionality. This did not stop several high-cost states that claimed to be targeted by the cap from challenging it. With their best chance, the Second Circuit rejected, the states decided to take it a step further and go to the Supreme Court, hoping the outcome would be different.

The Monday order leaves the cap in place. U.S. Rep. Bill Pascrell of New Jersey commented that his state’s delegation remains united to enact SALT reform through Congress this year. Pascrell and other law-makers have vowed to oppose any White House tax proposals that do not raise the $10,000 cap. Pascrell believes that critics of their push on SALT operate on incorrect assumptions. Law-makers like Pascrell say that SALT is not only about providing tax relief to the middle class, but it is about supporting their communities. New Jersey cities and towns directly rely on SALT to finance police, road-building, and public transit. A restored SALT cap would help provide the necessities communities rely on daily. Fellow New Jersey Rep. Josh Gottheimer slammed the deduction cap and urged the Senate to approve legislation raising it. Last year, the Build Back Better Act passed by the House included a cap increased to $80,000, but the Senate has not taken up the bill, which has effectively been declared dead. 

More than 20 states have enacted workarounds similar to those enacted on April 7 2022 in New York. The $220 billion New York law included adjusting state and local tax laws affecting the cap. The move allows more state residents to get the full benefit of a state workaround to the cap that gave partnerships, LLCs and S corporations an avenue to ease the cap’s impact on individuals’ federal deductions for paid state and local taxes. 

New York, New Jersey, and Connecticut have also sued, challenging Treasury Department regulations blocking a form of state SALT cap workarounds. The efforts involve tax credits offsetting many donations to state and local charitable funds. The rules blocked federal deductions for donations.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

Today, the biggest challenge with accounting data analytics is how quickly the sheer amount of data available can become overwhelming. As the utilization of data in accounting continues to grow, it becomes a challenge to determine which data is relevant and essential to make more informed decisions. How do you find and separate the relevant data? You need to know your audience and what you’re trying to accomplish and utilize technology to prevent information overload.

Identify Your Audience: While the data does not change, the story that it tells may vary from person to person. Different stakeholders may have very different questions. Knowing who will be asking these questions is just as important as the question itself. Considering time and billing data, staff and seniors would be interested in how they compare to their peers, such as details about where they are exceeding expectations or falling behind. However, managers will not want quite that level of detail, preferring a summary view that highlights only those who fall outside the first or second standard deviation.

Managers and partners may be interested in learning more about staff efficiency. They would benefit from an analysis of which staff are most effective at various types of engagements to assist with planning. If the audience is just you, it is also important to identify that. All too often, when we are the only audience, the question becomes secondary, and analysis becomes the purpose – which is not the best use of time.

Know What You Are Trying to Accomplish: To perform an effective analysis, you need to have a question, purpose, or objective. A poorly constructed question can lead to costly and time-intensive data reviews that do not accomplish anything. Before diving into the data, determine what you are trying to discover. Data analytics results will only be as good as the questions you ask. When preparing your questions, consider your audience, strategic goals, and budget. If you are struggling with understanding what questions to ask, start broad, but do not stop there. While it is often helpful to start broad, the question needs to be specific to get valuable and actionable insights. Some questions to ask yourself include:

  • What is the goal of this analysis?
  • What decision-making will it facilitate?
  • What outcome would be considered a success or a failure?


Implement Automation to Prevent Information Overload: Consider the data accounting firms and tax preparation businesses often track without thinking about it. There is internal data, from time tracking and how clients are served to practice management data such as billing, collections, business development, and client data, which is information about the client collected during the engagement process. Also, some data is a mix of the two: client and prospect interactions with internal content such as emails, webinars, websites, and social media. Technology has allowed us to collect the data listed above and so much more. Technology has also allowed us to perform our data analysis faster and on a much larger scale. But there are downsides to all advances – and for accounting data analytics, information overload is one of them.

Although technology created the problem of too much data, it can also help find the relevant data. Advanced technologies like machine learning and AI can automate the base data analysis, which gives structure to unstructured data and provides accountants with the most pertinent information. With automation sifting through the data, we can perform higher-level data analysis and understand how to shape the answer for intended audiences.

From technology-based accounting solutions to management information, analysis, and reporting, Talley LLP is the premier business consulting firm for entrepreneurs and their closely-held businesses. For more details about leveraging your business’ data technology, contact Talley today.

The U.S. Small Business Administration (SBA) has detailed a new process for borrowers to appeal decisions regarding their Paycheck Protection Program (PPP) loans that were only partially forgiven by the lenders.

Now borrowers can request, through their lender, an SBA review of their loan if they received a partial forgiveness decision from the lender they did not agree with, or if they were required by their lender to apply for forgiveness in less than the full amount of the PPP loan. However, the new process does not apply if the borrower applied for less than full forgiveness of their own volition.

For borrowers who had previously received partial forgiveness approval from the lender, or whose lender required a PPP forgiveness application that was less than the full amount of the PPP loan, lenders have 30 calendar days from receipt of the SBA’s procedural notice to notify borrowers of their right to receive an SBA review. Borrowers will then have 30 days from the receipt of the lender notification to submit their request through the lender for the SBA loan review. Lenders informing borrowers of SBA approval of a partial loan forgiveness must notify the borrowers that they have 30 calendar days from receipt of the notification to submit their request through the lender for the SBA to review the loan due to new SBA guidance. Even if the SBA selects the loan for review, the borrower must continue to make payments on the remaining balance of the loan, as the loan is not deferred. The lender will be required to refund those payments if the SBA rules that the loan should have received full forgiveness.

If the SBA’s review determines the borrower is entitled to forgiveness in an amount greater than the lender’s partial approval decision and the SBA has previously remitted a partial forgiveness payment to the lender, the SBA will remit an additional forgiveness payment to the lender to make up the difference and re-amortize the PPP loan to adjust for the difference. If the SBA loan review agrees with the forgiveness amount approved by the lender, the SBA will issue a payment notice within five business days to the lender that the forgiveness amount has been upheld. If the SBA loan review results in a lesser forgiveness amount, the SBA will issue a final loan review decision to the lender, which must then provide a copy of the Payment Notice and, if applicable, the final SBA loan review decision, to the borrower within five business days. The lender must then remit the excess amount of the loan previously forgiven to the SBA and re-amortize the PPP loan to adjust for the difference.

Talley’s professionals have spent hundreds of hours reviewing the law, regulations, and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.

While Curry is confident in torching the net with every shot he makes, not all of his made baskets are treated equally from his perspective. Curry and his personal trainer, Brandon Payne, worked hard this past off-season to ensure precise and efficient shots. Payne utilized technology to track the ball’s movement as Curry practiced his shooting, and converted it into data they were able to analyze and leverage to improve Curry’s already lethal shooting skills.

In order to quantify Curry’s free throws, the technology used tracked the ball’s arc as well as how close to the center the ball entered the basket. Payne and Curry agreed that if the ball did not drop through the middle, it was a failed attempt. These standards also applied to Curry’s moving shots, as if he were up against a defender as well. So far the results speak for themselves, with Curry currently leading the league in scoring, averaging 30.4 points per game.

Just as many businesses take time to perfect new processes, Curry had to do the same. Curry and his team of trainers are able to identify bottlenecks and measure efficiency from basket to basket to ensure he is putting his best foot forward, as well as maintaining peak performance and synergy with the team. Curry comments that if one does not have the kind of stimulation within workouts and practices that Payne provides, then they become mundane and chore-like.

With an ever-expanding surplus of information, it is increasingly difficult for organizations to decide where to focus their efforts to deliver meaningful results. Here are three key things to remember;

  • Data and metrics can be too much. Be sure to talk with your advisors to determine what you should be focusing on, such as Curry and Payne choosing to analyze the arc and the location of the ball going into the net.
  • Like basketball, business is a team sport. As Curry knows, success depends on both individual performance and the overall performance of the group. Variations on this type of analysis can be applied to businesses when you use metrics to identify bottlenecks, measure efficiency, and increase accountability across key departments and personnel.
  • Strategic partnerships are everything. Curry and Payne worked with expert data, analytic software, and hardware providers to help them succeed, and you should too. Choosing the right advisory team can mean the difference between simply spinning your wheels and growing your business to its full potential.

With over 25 years of experience consulting with industry-leading companies, Talley LLP is committed to providing clear, knowledgeable, and applicable financial data and analysis solutions, enabling management to intelligently track performance, progress, and profits. To determine whether your business is taking advantage of all the metrics available to make the most informed decisions for future success, schedule a time to talk with us today.

After more than a year of the Paycheck Protection Program and legal challenges, the Small Business Administration (SBA) is dropping their request that larger borrowers provide supplemental financial information. Due to this change, it is easier for big borrowers to apply for PPP loan forgiveness. The SBA’s effort marks an about-face for the agency that landed in hot water after allowing publicly traded companies to access the program intended for small businesses. The SBA began informing lenders that it plans to eliminate the loan necessity review for PPP loans of $2 million or more. They said they will no longer request the loan necessity questionnaire for any PPP loan reviews as well. In October, the SBA asked lenders to provide loan necessity questionnaires for both for-profit and nonprofit PPP loan borrowers that had or exceeded $2 million. On the other hand, smaller businesses were only required to self-certify for potential need.

The questionnaire itself took a lot of time and energy for borrowers to fill out. It asks for a litany of supplemental financial information such as gross revenue, capital on hand, and a list of the highly paid executives. Not to mention it had questions regarding business operations and business activity. Many businesses worried that the information they were providing could fall into the public domain.

In April of 2020, the U.S. Treasury encouraged businesses with an alternative way to raise funding to return the money. It also encouraged companies to look deeply into if they need federal funds to guard against the economic uncertainty. The U.S. Treasury also added that a public company with substantial market value and access to capital markets would not meet the standards required for attaining a government-backed loan. The SBA also issued a final interim rule. This rule notes that hedge funds are not eligible for federal assistance through the PPP. The SBA alluded that private equity-backed companies would face a level of scrutiny like public companies when applying for a PPP loan.

Closer inspection of the bigger loans was thought to be useful for preventing companies that did not need emergency funding from tapping the PPP loans. It also served as a mechanism for weeding out publicly traded companies and other firms that have alternative funding.

After a year of the PPP, the SBA has helped in loaning over $780 billion in emergency funds to more than 8 million small businesses throughout the U.S.A. The SBA’s interests are to keep the forgiveness process streamlined and drama-free. Former director of the SBA’s office of capital access, Bill Briggs, said that the SBA is looking to further expedite the forgiveness process for borrowers and ease some administrative tasks that the agency is currently facing. In December of 2020, the Associated General Contractors (AGC) of America filed a lawsuit against the SBA, seeking to amend the loan necessity questionnaire to allow borrowers to provide additional context explaining the totality of their circumstances. The AGC notes in their complaint that the questionnaire does not ask borrowers to describe the status of their operations and the attendant business anxieties back in the spring. Instead, it focuses on what came after, over the ensuing months of 2020. This pushed the SBA’s information request outside their purview. The goal of this lawsuit was to achieve a more rational review of what borrowers in general knew and did not know at the time they applied for loans. They were also trying to persuade the SBA that economic uncertainty was a major factor.

Looking past what may have been the SBA’s reasoning behind the change, businesses should be looking to complete the next step and figuring out an action plan. Although businesses won’t need to file the supplemental form anymore, they may still need to provide financial documents of need. After receiving forgiveness, businesses won’t be “off the hook” either, they may be audited many years later. It is a good idea for businesses to hold onto financial documents relating to PPP loans for at least 6 years.

Talley’s professionals have spent hundreds of hours reviewing the law, regulations, and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.


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