The IRS this week issued guidance clarifying that SBA payments on existing 7(a) and 504 loans under Section 1122 of the CARES Act are no longer considered taxable income to the borrower.
The change — which means lenders will no longer be required to furnish SBA borrowers with 1099-MISC forms — is due to an ICBA-supported provision of the end-of-year Economic Aid Act stimulus law.
This week's guidance also reiterates that proceeds from Paycheck Protection Program forgiveness, Economic Injury Disaster Loans, and other stimulus programs are not considered taxable income for recipients.
However, these waivers do not affect requirements to file and furnish other forms, such as 1098 forms on mortgage interest payments that may be deducted.
