The IRS said lenders that reported specific payments on subsidized coronavirus loans as income to borrowers need to file and furnish corrected forms excluding those payments.
IRS Announcement 2021-2, issued February 1, follows up on a notice released weeks earlier that highlighted the waiver of specified reporting requirements in the Consolidated Appropriations Act, 2021 (P.L. 116-260). In Notice 2021-6, 2021-6 IRB 1, the IRS waived the requirement for lenders to file miscellaneous information forms with the IRS or furnish those forms to borrowers regarding the reporting of principal, interest, and any fees subsidized by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).
The IRS announcement says that “the filing of information returns that include these loan payments could result in IRS correspondence to borrowers regarding underreported income, and the furnishing of payee statements that include these loan payments to borrowers could cause confusion.”
The IRS added that if the lender has already furnished Forms 1099-MISC, “Miscellaneous Information,” to borrowers that report those loan payments, the lender must furnish to the borrowers corrected Forms 1099-MISC that exclude those loan payments.
If a lender has already filed those forms, it must file corrected forms excluding those payments, according to the IRS.