If you had other sources of liquidity available to your company, and applied for the Paycheck Protection Program anyway, now might be the time to think about giving the cash back. You have just over a week to act.
"Good luck from a legal perspective arguing that someone has made a false certification when the CARES Act — the legislation that established the PPP — only says you need to certify that you need the money due to economic conditions," Nitti said.Nitti said he recently spoke with a client who was trying to decide whether to return the PPP funds. Though the calculations seemed to suggest the business was fine in the present, two major customers are running into trouble.
"So the dark times are probably ahead," Nitti said. "Why give this money back? When he took the loan, his business looked solid, but he could be in dire straits in three weeks."For now, professionals are telling small business owners to maintain detailed records detailing how they use the money and prepare for the possibility of further scrutiny.
"We've been telling people that when they get the funding, they need to go to the bank and open a separate account," said Dan Herron, CPA and principal at Elemental Wealth Advisors in San Luis Obispo, California.More from Smart Tax Planning:
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