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PPP Loan Forgiveness: Waiting for Answers

PPP Loan forgivenessJust over a week ago, the Internal Revenue Service (IRS) released an opinion on the deductibility of expenses relating to the forgiveness of Paycheck Protection Program (PPP) loans (IRS Notice 2020-32).  When Congress passed the CARES Act in March establishing the PPP, the legislation stated that any portion of the loans that were forgiven would be non-taxable income for taxpayers.

Many of us speculated that the IRS would follow their statutes and rule that though the forgiven income is non-taxable, the payroll, health and retirement benefits, rent, utilities and interest expense that qualify for the loan forgiveness would be deemed non-deductible. Indeed, this is exactly how the IRS ruled in the notice, stating that, as the expenses would relate to non-taxable income, they would in turn not be deductible.

Along with many taxpayers, several legislators in Congress are very upset about the ruling and feel that it is not in line with their legislative intent. They would like Treasury Secretary Steven Mnuchin to reverse the IRS position. In the alternative, the legislators plan to introduce legislation to mandate these expenses be allowed as tax deductible, as their intent was to make this program very generous. This would also be consistent with the tax treatment of an alternative option in the same law, the employee retention credit.

We will wait and see in the coming months how this plays out. In the meantime, it is expected that within the next week or so, we should be receiving some much-needed guidance from the Small Business Administration (SBA) on numerous PPP loan forgiveness questions. Among them are the following.

  1. Will costs such as payroll only be allowed if paid during the 8-week period after loan funding or will we be able to include payroll paid after the 8-week period that relates to work done during the 8 weeks?
  2. For loans funded after May 6th, will taxpayers be able to extend their 8 weeks beyond June 30th?
  3. Will any restrictions be made on self-rental properties?
  4. How are FTE’s (full time equivalent employees) being calculated?
  5. What exactly does it mean to have your workforce restored by June 30th if they were not restored during the 8-week period in order to get loan forgiveness? How long do they need to stay on the payroll?
  6. Are there any restrictions on hiring and paying family during the 8-week period?
  7. Is interest on non-mortgage debt allowed?
  8. What retirement benefits will be allowed? Do they need to be paid during the 8-week period in order to be forgiven? Will payment of an accrued liability from the prior year qualify for loan forgiveness?

These are just a few of several questions that have been asked with no clear guidance on PPP loan forgiveness. Hopefully, we will have that soon. We continue to recommend that PPP borrowers make a good faith effort in determining cost eligible for forgiveness. 

As new information comes forth, its critical that you work closely with your trusted advisors so you’re able to make the best decisions to position your business to emerge from the pandemic in as healthy a position as possible.

Kevin GilmoreGilmore Jasion Mahler Managing Partner Kevin Gilmore provided this blog. For more information on the impact of the pandemic on your business, we encourage you to visit the GJM COVID-19 Resource Center.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

Welcome Back to GJM, Lauren

Lauren Webber Gilmore Jasion MahlerA familiar face has returned to Gilmore Jasion Mahler. Lauren Webber is back on board as a Tax Supervisor and member of GJM's Construction Specialist Team and Manufacturing Specialist Team. Enjoy this Q&A. Welcome back, Lauren!

When did you start employment at GJM? 10/28/19 – formerly employed 2015-2017

Why did you choose the accounting industry? I like working with people and numbers.

What do you like best about accounting? Helping people solve problems/reach goals.

Are you from the Toledo area originally? If not, where are you from? I am from Toledo.

What do you like about living in Northwest Ohio? I love the greater Toledo area!  It’s a community-minded and engaging place to be.

Anything you’d like to share about your past professional experience? I am proud to have been the Owens Corning Volunteer of the Year in 2018.

Do you have any pets, hobbies, family? I have way too many pets- cats, dogs, fish, reptiles, small mammals, you name it.

How do you like to spend your free time? With pets/family/friends.  I also enjoy running, painting, reading, playing piano.

Favorite song or music? That’s too hard to pick!

Favorite book or movie? Book- A Prayer for Owen Meany by John Irving | Movie- Donnie Darko

Are you involved in any community organizations, do any volunteer work? I am the treasurer for Paws & Whiskers Cat Shelter and for Toledo Streets Newspaper.

What is something people may be surprised to find out about you? I hope to have farm animals one day.   

Sweeping Changes to Retirement Planning

Required Minimum Distributions Change 2020Sweeping change is coming to the way you plan for your retirement. Congress passed the SECURE (Setting Every Community Up for Retirement Enhancement) Act as part of a huge government spending deal at the end of 2019. Gilmore Jasion Mahler is already getting questions from clients wondering how they’re affected by the changes.  

While the SECURE Act includes a number of changes that will impact retirement planning, the change with perhaps the most immediate impact involves the age at which individuals need to start taking required minimum distributions (RMDs) from their retirement accounts. As of the year 2020, that age has been changed to 72 years old from the former age of 70-and-a-half years old. Here’s an important note: If you were 70-and-a-half at the end of 2019, you are not impacted by the law change, and will still need to start taking your RMDs at 70-and-a-half years old.

The SECURE Act brings other retirement planning changes as well, including:

  • Increasing restrictions on how non-spouse beneficiaries stretch out RMDs from a loved one’s retirement account
  • Allowing people who work past the age of 70-and-a-half to contribute to an IRA (with some restrictions)

What should you do?

The SECURE Act could change how you plan for your retirement in a number of ways. It is important that you consult with your GJM tax advisor to understand the impact as it relates to your personal situation. You can learn more about GJM's tax experts and our team capabilities here.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.  

GJM’s Mary Jo Pitzen Promoted to Partner

Gilmore Jasion Mahler’s (GJM’s) Mary Jo Pitzen, CPA has been promoted to partner with the firm. Mary Jo has been with GJM for over 12 years. She is a member of the firm’s Construction Specialist Team. Mary Jo provides tax planning, compliance and business advisory services for individuals and all types of businesses in a variety of industries, including manufacturing, construction, healthcare, and professional services.

“This is a very well-earned promotion. Mary Jo provides great client service and has done an excellent job in helping to continue growth in our construction practice,” says GJM Managing Partner Kevin Gilmore.

Mary Jo is a member of the Construction Financial Management Association (CFMA) Northwest Ohio chapter. She is also a member of the local chapter of the National Association of Women in Construction (NAWIC), holding a board position with the organization for the last four years.

A graduate of The University of Toledo, Mary Jo joined GJM upon graduation and has been with the firm ever since.

“I love who I work with, both within the firm and the clients we serve. We have a great group of people at all levels who work well together, share and encourage each other to grow. I love our team-oriented atmosphere.”

Mary Jo is also a graduate of Leadership Toledo and will soon be a graduate of the Partner Development Program (PDP) through the RSM US Alliance. The program offers training to improve leadership skills.

“My biggest take away from PDP is a better understanding of who I am. It will make me a better coach for young people coming up in the firm and allow me to better serve my clients as well.”

Mary Jo lives in Waterville with her husband and 6-year-old son.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. GJM’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

Tax Partner Steve Schult to Retire

After 21 years with Gilmore Jasion Mahler (GJM), Tax Partner Steve Schult has decided it is time to retire at the end of 2019. Steve works with many different clients, from individuals to family businesses to multi-national companies. Aside from his client service, he is a career advisor to young professionals within the firm and has taken an active role in GJM’s community service efforts. As he prepares to retire, he took some time to reflect on his years of client service and his time at GJM.

What do you like most about the work you do?

Steve: Getting to know and working with clients - and helping them not only save taxes, but also make decisions that are best for their businesses and their families. I have always said that taxes are a piece of your decision, not the whole decision. Being in public accounting my whole career, I also always appreciated the fact that I was working with the best and the brightest.  I learned something every day from not only my other partners, but everyone in the firm.

What made you decide to retire now?

Steve: My wife Diane and I both had some prior health issues.  We are fine now, but it makes you realize that life is short.  It’s time to slow down and smell the roses.  (For you Michigan fans, just FYI, you smell a lot of roses when you go out to the Rose Parade and the Rose Bowl!)

What will you miss the most?

Steve: That’s easy – the daily interactions with clients and the people at GJM.  I am extremely lucky to have worked with so many smart, quality and fun people in my career.  I already know I will struggle with that.

What will you miss the least?

Steve: That’s easy too - Keeping track of time daily and the constant tax deadlines.

Favorite story about helping a client with a tax problem?

Steve: There are actually two stories.

Early in my career I had a 70-year-old client who owed a lot of money on his tax return because he had a large capital gain that was missed in his year-end planning.  I felt it would be best to meet with him to personally review the return.  I called and said I would like to meet him to review his return with him – and he said to meet him at his office on my way in to work the next morning.

After losing sleep that night thinking about the meeting, I met him at his office the next morning.  Upon entering his office, he said “Stevie, you are never going to believe what I got it the mail yesterday when I got home from work.  I applied for tickets to the Masters golf tournament 40 years ago and was informed that I am finally off the waiting list. I now have four tickets to the Masters for the rest of my life!”  Upon asking what I wanted to discuss with him I said, “You owe $25,000 on your tax return”.  He said “Stevie, no problem – I don’t care.  You must not have heard me.  I now have four tickets to the Masters for the rest of my life!”  Timing is everything!  

I also had a large business client who was going through a tough IRS audit.  While most IRS auditors I worked with were pretty reasonable, the agent on this case was very difficult.  Wanting to hopefully resolve a few issues with him, the client and I met with him one day right after he had gotten back from the eye doctor – and he was wearing sunglasses because his pupils were dilated.  Having recently watched some poker tournaments on TV, I semi-jokingly told him it wasn’t fair that he was wearing sunglasses during a negotiation.

After failing to come to an agreement, we requested a meeting with him and his case manager to hopefully resolve our issues.  Upon entering the meeting a few days later, the client team and I were all wearing sunglasses.  The IRS case manager was very amused by this, setting the tone to finally get the issues on the audit resolved.

Favorite memory or story from your time at GJM?

Steve: While there are many, my favorite memory is from our involvement with Flag City Honor Flight.  The night we raised over $125,000 we were all in shock.  Going to Washington DC as a guardian on one of the flights was also a memory I will never forget – and is something I would encourage everyone to do.

What are your plans in retirement?

Steve: Getting in shape; learning to play the guitar; hiking a few times a week in Oak Openings with my two dogs (they keep me walking at a brisk pace); XC-skiing; fly-fishing; learning woodworking from my dad and helping him on the family farm; more time with Diane, (which she may regret) kids and grandkids; getting more active on a few boards; travel; and many more fun adventures that I don’t even know about yet.

Do you have any travel scheduled?

Steve: Yes.  XC-skiing trip in January, visit cousins in Lake Tahoe in February, finally getting to go to Detroit Tigers spring training in Lakeland Florida in March, a trip to hike in the Scottish Highlands this summer, and other trips with kids/grandkids that we haven’t quite finished scheduling yet.

Are you totally disconnecting from GJM or will you be around for client issues, etc.?

Steve: While I don’t want to interfere with other people at GJM developing their own relationships with clients I worked with in the past, I will still be in the Toledo area and will be available as needed.  I want to make sure there is a smooth transition and want to also make sure our clients are being properly served.  I’m sure I could add historical perspective that may be helpful in some situations.   

Will you still stay involved in some GJM events, like the Big Brothers Big Sisters Holiday Party and Flag City Honor Flight?

Steve: If I am not traveling, I would certainly be available to help with the many great causes GJM has supported over the years.

There’s been a lot of change in the accounting industry during your time in the field.  Do you have any advice you’d give to young people pursuing the field now?

Steve: Every industry is constantly changing.  I think the best advice for any young person is pretty easy:  Work hard, communicate, get involved in your community, and show your clients, your family and the people that work with you that you appreciate and care about them.

Anything else you’d like to add?

Steve: As I mentioned before, I know I will miss the constant interactions with clients and the people at GJM.  Those people become part of your family.  I am not leaving the Toledo area.  Now that I will have the time, hopefully people will still occasionally call me for breakfast, lunch, dinner, fishing, etc.  I know Diane will appreciate them getting me out of the house and out of her hair for a while!

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.