IRS: Lenders should not report PPP debt forgiveness

Federal Issues CARES Act SBA Covid-19 IRS

On September 22, the IRS released Announcement 2020-12 notifying lenders that they should not report the amount of qualifying loan forgiveness for covered loans to qualifying small businesses made under the Paycheck Protection Program (PPP).The IRS code generally requires lenders to file a Form 1099-C for any discharge of indebtedness of at least $600. However, the IRS’ announcement specifies that when a portion or all of the principal is forgiven under the requirements of Section 1106 of the CARES Act, lenders, for federal income tax purposes only, should not “file a Form 1099-C information return with the IRS or provide a payee statement to the eligible recipient under section 6050P of the Code as a result of the qualifying forgiveness.”