IRS Publishes Information Reporting Guidance on SBA, Other Subsidies

The Internal Revenue Service today issued guidance addressing various tax information reporting issues that arose as a result of taxpayer subsidies included in the CARES Act and the more recent COVID-19 relief bill. In general, the notice confirms that information returns (such as the 1099-MISC, 1099-C, etc.) are not required for recipients of loan forgiveness or other subsidized payments.

Importantly, the notice addresses reporting issues raised by a prior SBA notice that required the issuance of Form 1099-MISC and Form 1098 to report 7(a) loan subsidies as income and subsidized expenses (mortgage interest) as interest paid.

Today’s guidance provides that original and second-round PPP forgiveness, emergency financial aid grants for students, Treasury program loan forgiveness, EIDL grants, loan subsidies and shuttered venue operator grants are not considered reportable income. However, the notices does allow for reporting subsidized mortgage interest on Form 1098.