The IRS recently notified lenders that they should not file “cancellation-of-debt” information returns or furnish payee statements to borrowers. Section 6050P of the Internal Revenue Code generally requires that a lender who forgives $600 or more of a borrower’s indebtedness to file “Form 1099-C, Cancellation of Debt.”
However, due to the extent of PPP loans borrowed throughout the country, the IRS is advising that when all, or a fraction of, the principal amount of the PPP loan is forgiven, the lender is not required to and should not fille Form 1099-C, nor should they provide a payee statement to the eligible recipient. The IRS further states that filing such forms or furnishing payee statements could cause greater confusion and could lead to additional underreported notices going out in the mail.
What does this mean for you? If you are a recipient of PPP funds, do not worry if you do not receive a 1099-C in the mail. The funds will still be excluded from your gross income.
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