Forgiveness of Paycheck Protection Program Loans No Longer to Prevent Deferral of Payroll Taxes

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The recently enacted Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (the CARES Act) allowed employers to defer the payment of certain employment taxes due for 2020. The CARES Act, however, also included an exception for recipients of a paycheck protection program loan (established by the Act) that had such loan forgiven.

The Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) passed by Congress on June 3, 2020 and signed by the President into law on June 5, 2020, amends the CARES Act to eliminate such exception, effective as if included in the CARES Act to begin with. Consequently, the ability of employers to defer certain 2020 employment taxes pursuant to the CARES Act is not hindered by either the receipt of a paycheck protection program loan or its forgiveness.