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Guidance issued on reporting stimulus benefits

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Tax Hot Topics newsletter The IRS has issued guidance on filing information returns or providing statements related to certain loan forgiveness, grants and loan subsidies provided by the CARES Act or stimulus provisions included in the Consolidated Appropriations Act, 2021.

Announcement 2021-2 requires lenders who have already filed Forms 1099-MISC reporting CARES Act Small Business Association (SBA) loan subsidies as income to reissue the forms with the loan amounts excluded. The Consolidated Appropriations Act retroactively provided that these subsidies, and emergency Economic Injury Disaster Loan (EIDL) grants, are excluded from income. Lenders must refile the corrected forms with the IRS and furnish them to borrowers.

The announcement builds on Notice 2021-06, which provides reporting relief for other stimulus subsidies subject to special tax treatment. Paycheck Protection Program (PPP) loan forgiveness is also excluded from income, and the Consolidated Appropriations Act provides that taxpayers can fully deduct expenses paid out of forgiven loan proceeds. Notice 2021-06 provides that information reporting is not required for the following information returns:

  • Form 1099-C for loans forgiven under the PPP
  • Form 1099-MISC for student financial emergency grants
  • Form 1099-C for loans forgiven under the Treasury Program Management Authority
  • Form 1099-MISC for EIDL advances or grants
  • Form 1099-MISC for SBA loan subsidies
  • Form 1099-MISC for payments or grants to shuttered venue operators

The notice clarifies that the waivers do not affect the requirements to file and furnish other forms. It also provides that mortgage interest payments made by the SBA under the CARES Act should be included on Form 1098 to prevent notices of underreporting for taxpayers who properly deduct those amounts.

Contacts:
Dustin Stamper
Managing Director
Washington National Tax Office
T  +1 202 861 4144

Buck Buchanan
Managing Director
Atlanta Office
T  +1 404 704 0146

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