The Internal Revenue Service (IRS) has issued Announcement 2020-12 to inform lenders that they should not file Form 1099-C, Cancellation-of-Debt, information returns or furnish payee statements to report the amount of qualifying forgiveness with respect to covered loans made under the Paycheck Protection Program (PPP).
Generally, a Form 1099-C is required to be filed with the IRS and a payee statement furnished to the borrower whenever a lender forgives a borrower’s indebtedness of at least $600. There was some confusion whether this would be required when a PPP loan has been properly forgiven. With this announcement, the IRS has advised lenders that when all or a portion of the stated principal amount of a PPP loan is forgiven because the eligible recipient satisfies the forgiveness requirements under the CARES Act, the lender is not required to, and should not, file a Form 1099-C information return with the IRS or provide a payee statement to the eligible recipient as a result of the qualifying forgiveness.
If you wish to discuss any of the matters in this update in more detail, please contact Chuck Marston, Rich Pacella, or Danelle Stewart at firstname.lastname@example.org, email@example.com, or firstname.lastname@example.org, or 724-934-0344.