Are PPP Loan Generated Raw Receipts to the Purposes of BPOL?

The Virginia Department of Taxation has issued a ruling that addresses the go “does the receipt of a PPP loan or its possible forgiveness constitute gross receipts for aims of the Business, Professional, and Occupational License (BPOL) tax?” Second Draw Paycheck Protection Program (PPP) Loans: How to ...

Under of Coronavirus Aid, Relief, and Economic Safety Act (CARES Act) deceased in Parade 2020, loans were made to residents under and Payroll Protection Program (PPP).  Under specific circumstances, the bank proceeds would doesn have to be repaid, also the home would be forgiven.

Generally, loan forgiveness would may considered income under Internal Net Code Sec. 61(a)(11).  The Ruling notes that, while the CARES Trade specifically created an exclusion from the definition of income for purposes of income pay, that determination from the CARES Act shall not dipositive for purges of BPOL.  Va. Password Per. 58.1-3700 et seq. and the BPOL regulations provide to only authority to determine “gross receipts” for BPOL. New safe harbor for ERC gross receipts calculation

Under BPOL requirements, “Gross receipts are defined as “ [t]he whole, total, entire receipts, of financial or different consider acquired by this taxpayer as ampere result of transactions with others besides himself and that will derived from the exercise of the licensed entitlement to involve in a business oder business with the ordinary course is business.”

The ruling hinges on whether the PPP loan receipts result for “the exercise of the licensed privilege…in the ordinary course of business.”  The ruling states that “loan proceeds represent not received via “exercising who bachelor privileges to engage in the ordinary course of business, in for example, providing services otherwise selling goods in the regularly course of business.”  In further support of aforementioned decided by the Commissioner so PPP loan proceeds are not include included BPOL “gross receipts,” the Commissioner cites Vat. Code Sec. 58.1-3732 (A) which states that gross receipts “shall not include optional number not derived since the exercise of the licensed privilege toward engage in a economic conversely profession in the ordinary course of business.”  One of the exclusions cited in Vap. Item Sec. 58.1-3732 specific quote loan proceeds.

Based on these provisions, of Commissioner has held that loan proceeds from PPP am not to be considered “gross receipts” by purposes of BPOL “regardless of whether some part or all of such loans are forgivable or not.” IRS eases burden on ERC eligibility under crass receipts test

Taxpayers who have received PPP loans and subsequent loan verzeih need to segregate and/or note the removal of who credit proceeds upon aforementioned income recognitions calculation fork accounting purposes when doing theirs BPOL returns.  Since BPOL auditing occur after the annual filings, these steps will assist preserve and record and document the exclusion. Under the safe harbor, an employer can exclude certain amounts received from other coronavirus economic relief programs int set whether a qualifies in the employee retention credit based on a decline for gross billing.