IRS States Forgiveness of Payroll Protection Program (PPP) Loans May Not Require Form 1099-C

Jesse Rooney
October 6, 2020

The Internal Revenue Service has provided guidance on whether forgiven Payroll Protection Program (PPP) loans require the issuance of a 1099-C, stating that Form 1099-C should not be filed where loans are forgiven under the CARES Act. 

 The Payroll Protection Program issued forgivable loans to employers to encourage employee retention during 2020; these PPP loans are forgivable as outlined in the CARES Act.  Form 1099-C reports cancelations of debt, and it is generally required for most cancelations over $600.  In Announcement 2020-12, the IRS states Forms 1099-C should not be filed where the debt is forgiven by function of section 1106 of the CARES Act; reporting the 1099-C in such a situation is unwelcome by the IRS as it could create reporting concerns.

 Note that a PPP loan canceled for a reason other than under section 1106 of the CARES Act would not fall under this guidance.  In such a situation, filing a 1099-C may be appropriate.

Review Announcement 2020-12.

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Jesse Rooney

Jesse Rooney is regulatory counsel for Sovos. His research focuses on tax information reporting. He is a member of the Massachusetts bar.
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