Some construction companies may receive large tax bills relating to Paycheck Protection Program loans, says the Internal Revenue Service. The IRS released guidance last week regarding tax implications for construction companies that plan to ask for PPP loan forgiveness, according to Construction Dive. A forgiven PPP loan is tax-exempt, but actually using the loan can reduce how much a company can write off on business taxes. And a loan is only forgivable if borrowers use a minimum of 60% for payroll costs and 40% for other costs such as rent and utilities.
Joseph Natarelli, leader of the national Construction Industry Practice group at accounting firm Marcum, told Construction Dive that many of his clients are considering not applying for PPP forgiveness in order to avoid a hefty tax bill.
“They’re saying, ‘If I knew then what I know now, then I wouldn't have taken the loan and I would have had to lay people off,’” he said.
The bottom line for contractors, Natarelli said, is to check with their accountants about tax implications before applying for loan forgiveness.
Advertisement
Related Stories
Remodeling
Aging in Place: My Aunt Nancy’s New ADU
An apartment addition for an accessory dwelling unit to allow a family member to age in place presents several challenges and lessons learned for both the homeowners and contractor alike
Housing Markets
Average Homebuyer Income Increased Considerably in 'Pandemic Boomtowns'
Remote workers moving to Boise, for example, have raised the average annual income of homebuyers by 24%, to $98,000
Housing Giants
What Now for Residential Construction? The Housing Industry Post-Pandemic
The COVID-19 pandemic is essentially over, but the disruption to the housing industry that lies in its wake will be felt for years to come