NC Tax Alert: Did You File a NC Amended Return Related to Receiving a PPP Loan?
Business owners who took advantage of the Paycheck Protection Program (“PPP”) should recall that when the program was announced North Carolina did not follow the tax-free federal treatment related to the forgiveness of these loans. This meant that taxpayers had to add these amounts to their North Carolina income making these proceeds taxable for North Carolina income tax purposes. It was only after the filing deadline for the 2020 returns that North Carolina reversed course and decided to conform to the federal provision and treat the forgiven amounts as tax-free for North Carolina purposes as well, through January 1, 2023.
Taxpayers affected by this change were required to file an amended 2020 North Carolina tax return to claim a refund of the tax originally paid on those forgiven PPP funds. As North Carolina has started processing these amended returns, we have become aware that there are inconsistencies between the refunds requested on the amended returns and the actual refunds that taxpayers are receiving. We have seen the refunded amounts be both higher and lower than what was reported on the amended return. So, once you receive your refund, we recommend comparing it with the amount that you were expecting.
If you notice any irregularities that you would like for us to review, please do not hesitate to reach out to your trusted BRC tax advisor.
