Posted on 04/23/2020 5:57:22 AM PDT by tired&retired
The university and school district ripoff of loan funds is the tip of the iceberg.
I just observed temp employment agencies and payroll service companies getting the loans that should have gone to the actual employer.
The actual situation I observed was a Company with 65 employees, all paid through a payroll service company. The payroll service company writes the payroll checks and is reimbursed weekly for all wages, taxes, and a premium to cover processing costs.
The payroll service Company got a PPP loan for all the wages FOR THE 65 employee wages paid indirectly by my client.
The payroll service Company is doing this for all their clients wages and keeping the tax free loan stimulus money...
This should be FRAUD .
Your client should apply.
Sounds like if the payroll company is the one disbursing the money to the employees, that’s the most sensible way to do it.
It would be fraud if the payroll service company isn’t paying your client’s employees or was paying the employees and then billing your client too. Otherwise, it looks as if the service company is just eliminating your client from the mix.
Especially if your client isn’t set up to pay it’s employees directly. Just my thoughts.
Companies that use peo are eligible for ppp loans.
Whose name appears on the W-2? The payroll service or the Company?
It sounds like your client is using a PEO. If that’s the case then the employees are paid under a different FEIN than that of your client. Because the payroll verification process will come back to the payee’s (PEO) EIN then they are the ones that will get the money. This does two things for your client: First, they won’t need to pay the PEO for the cost of payroll and benefits during the 8 week period the loan covers. Second, your client won’t be on the hook for paying the loan money back if, for some reason, they miss the 8 week window.
A number of businesses are going to have an issue with this. They have already laid off employees and those employees are collecting unemployment, often at a higher rate of “pay” than they were earning at work. Those employees likely won’t come back to work until their UI benefits run out and that could be well past the 8 week “free” window for PPP recipients. The other problem is that if the emlpoyee’s UI benefits are cut off because the employer offers a return to payroll, per the PPP program, there will be a lot of pissed off employees who will see things as losing their “big” benefit merely so the employer, who put them on the street to begin with, doesn’t have to pay back the loan. That could make for a fun work place...assuming the business is eventually allowed to open again.
Obviously those in place from the 2007/2008 financial crisis RIP OFF of the US Tax Payers are still on the JOB!
Thanks
I finally found what I was searching for. Could not have found it without Freeper comments above giving me clues...
Thank you all who commended.
Bottom line:
MOST IMPORTANT
” In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.”
https://www.uniquehr.com/ppp-peo/
April 7, 2020
Late last night, Guidance was provided by the Department of Treasury stating that when PEO clients are applying for the Paycheck Protection Program (PPP) lenders must accept payroll data provided by a PEO, and can’t turn down a borrower due to lack of a IRS Form 941. The language further states that lenders do not need 941s or other tax documents from a PEO client in order to qualify for a PPP loan. Click here to read the U.S. Treasury language.
Specifically, see question 10 –
Question: What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?
Answer: SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data on the Employer Identification Number (EIN) of the PEO or other payroll provider. In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.
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