1099-Misc

[peggysioux5]

S-Corp has a SBA loan in 2020 for which SBA made six payments of principal and interest due to COVID. The second stimulus enacted December 27, 2020 amended the CARES Act to provide that the SBA's payments of principal and interest made on behalf of the borrower were not taxable income to borrower. Bank that handles loan submitted a 1099-Misc reflecting the loan payments as "other income" in Box 3.  Being the payments are non-taxable, should a 1099-Misc be issued?

Peggy Sioux

[grandmabee]

no and I think I read where SBA is asking banks to send out corrected 1099's.

[Lee B]

Copied from The Journal of Accountancy:

"The IRS instructed lenders that have erroneously filed or furnished Forms 1099-MISC, Miscellaneous Income, reporting certain payments on U.S. Small Business Administration (SBA) subsidized loans as income of the borrower, to file and furnish corrected Forms 1099-MISC that exclude these subsidized loan payments (Announcement 2021-2).

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, the SBA is authorized to pay six months of principal, interest, and fees on covered SBA loans. The Consolidated Appropriations Act, 2021, P.L. 116-260, provides that these payments are not includible in the borrower’s gross income. In addition, Notice 2021-6, issued Jan. 19, waived Form 1099-MISC reporting requirements for these payments.

If a lender has already furnished Forms 1099-MISC that report these loan payments to borrowers either before, on, or after Dec. 27, 2020, (the date of enactment of the Consolidated Appropriations Act, 2021) the lender must furnish to the borrowers corrected Forms 1099-MISC that exclude these loan payments. In addition, if a lender has already filed with the IRS Forms 1099-MISC that report these loan payments, the lender must file with the IRS corrected Forms 1099-MISC that exclude these loan payments."

[peggysioux5]

Thank you so much for info.

Peggy Sioux