The IRS today released an advance version of Announcement 2021-2 to notify lenders that have filed with the IRS (or furnished to a borrower) a Form 1099-MISC, “Miscellaneous Information,” reporting certain payments relating to loans subsidized by the U.S. Small Business Administration as income of the borrower and further providing that these lenders must file and furnish corrected Forms 1099-MISC that exclude these subsidized loan payments.
Read Announcement 2021-2 [PDF 66 KB]
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136) authorized the SBA to subsidize certain payments of principal, interest, and any associated fees owed by a borrower on certain loans.
Subsequently, provisions of the Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260) retroactively provided that these subsidized loan payments are not included in the gross income of the person on whose behalf the payment is made.
The IRS in January 2021 issued Notice 2021-6 to waive a requirement for lenders to file with the IRS (or to furnish to a borrower) a Form 1099-MISC reporting the payment of principal, interest, and any associated fees subsidized by the SBA under the CARES Act provision.
Today’s release explains that the filing of information returns that included these subsidized loan payments could result in IRS correspondence to borrowers regarding underreported income, and the furnishing of payee statements that included these loan payments to borrowers could cause confusion. Accordingly, Announcement 2021-2 provides:
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