PPP and EIDL Loans

The Federal government recently passed two bills to give the government more time to catch and prosecute fraud related to the Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loans (EIDL).

These laws extend the statute of limitations to 10 years after the offense was committed. This longer statute gives the Department of Justice and other agencies more time to investigate large and more complex PPP and EIDL cases.

Due to the extension of time, which now applies to PPP and EIDL loans, we suggest that you extend your records retention related to these loans and tax years to 10 years from the latter of: the date the loan was received, the date the funds were used, or the date the loan was forgiven. We usually suggest retaining tax-related documents for seven years after filing.

Employee Retention Credit (ERC)

Included in the American Rescue Plan Act of 2021, the statute of limitations was extended for the IRS to aggressively enforce the ERC program for potentially fraudulent claims of these credits. This extended statute of limitations does not now expire until five years after the date the return claiming the credit is filed.

We usually suggest holding tax-related documentation for up to seven years from the filing date; however, the ERC and PPP programs can become intertwined; therefore, we suggest following the extended 10-year PPP rule above for ERC-related documents.

If you have any questions about how this might affect your business and its PPP or EIDL loans or ERC credits received, please contact your tax advisor.