Business Loan Program Temporary Changes; Paycheck Protection Program — Certain Eligible Payroll Costs
Summary
This is a Small Business Administration interim final rule, Business Loan Program Temporary Changes; Paycheck Protection Program - Certain Eligible Payroll Costs, published in the Federal Register, Vol. 85, No. 126, on Tuesday, June 30, 2020. The summary says that on April 2, 2020 SBA posted on its website an interim final rule relating to the implementation of Sections 1102 and 1106 of the CARES Act. The text addresses fishing boat owners that have hired crewmembers who are regarded as independent contractors or otherwise self-employed for certain federal tax purposes under 26 U.S.C. 3121(b)(20), describing a crewmember who receives a share of the boat's catch or proceeds as compensation. The background section recounts the March 13, 2020 emergency declaration for the COVID-19 pandemic.
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- Department Of The Treasury Interim Final Rule On Certain Eligible Payroll Costs Home Treas
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- Department Of The Treasury Interim Final Rule On Certain Eligible Payroll Costs Home Treasury Gov Sy 9E2Beaf953
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“Business Loan Program Temporary Changes; Paycheck Protection Program — Certain Eligible Payroll Costs.”
Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-the-treasury-interim-final-rule-on-certain-eligible-payroll-costs-home-treasury-gov-sy-9e2beaf953/
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39066 Federal Register / Vol. 85, No. 126 / Tuesday, June 30, 2020 / Rules and Regulations
SMALL BUSINESS ADMINISTRATION I. Background Information of aquatic animal life (fishing boat
On March 13, 2020, President Trump owners) and that have hired one or more
13 CFR Part 120 crewmembers who are regarded as
declared the ongoing Coronavirus
[Docket Number SBA–2020–0040] Disease 2019 (COVID–19) pandemic of independent contractors or otherwise
sufficient severity and magnitude to self-employed for certain federal tax
RIN 3245–AH54
warrant an emergency declaration for all purposes under 26 U.S.C. 3121(b)(20) of
States, territories, and the District of the Internal Revenue Code (the Code). A
Business Loan Program Temporary crewmember may be described in
Changes; Paycheck Protection Columbia. With the COVID–19
emergency, many small businesses Section 3121(b)(20) of the Code if the
Program—Certain Eligible Payroll fishing boat on which he or she works
Costs nationwide are experiencing economic
has an operating crew that is normally
hardship as a direct result of the
AGENCY: U.S. Small Business
made up of fewer than 10 individuals
Federal, State, tribal, and local public
Administration. and the crewmember receives as
health measures that are being taken to
compensation for his or her work a
ACTION: Interim final rule. minimize the public’s exposure to the
share of the boat’s catch or of the
virus. These measures, some of which
SUMMARY: On April 2, 2020, the U.S. proceeds from the sale of the catch, in
are government-mandated, have been
Small Business Administration (SBA) an amount that depends on the amount
implemented nationwide and include
posted on its website an interim final of the catch. Such a crewmember
the closures of restaurants, bars, and
rule relating to the implementation of generally may not receive additional
gyms. In addition, based on the advice cash remuneration or other
Sections 1102 and 1106 of the of public health officials, other
Coronavirus Aid, Relief, and Economic compensation for his or her services
measures, such as keeping a safe with respect to the fishing boat. A
Security Act (CARES Act or the Act) distance from others or even stay-at-
(published in the Federal Register on fishing boat owner must report
home orders, have been implemented, compensation paid to such a
April 15, 2020). Section 1102 of the Act resulting in a dramatic decrease in
temporarily adds a new product, titled crewmember on Box 5 of IRS Form
economic activity as the public avoids 1099–MISC. The First Interim Final
the ‘‘Paycheck Protection Program,’’ to malls, retail stores, and other Rule, posted on April 2, 2020, provided
the U.S. Small Business businesses. that because independent contractors
Administration’s (SBA’s) 7(a) Loan On March 27, 2020, the President have the ability to apply for a PPP loan
Program. Subsequently, SBA issued a signed the Coronavirus Aid, Relief, and on their own, they do not count for
number of interim final rules Economic Security Act (the CARES Act) purposes of another applicant’s PPP
implementing the Paycheck Protection (Pub. L. 116–136) to provide emergency loan calculation. 85 FR 20811, 20813
Program. This interim final rule assistance and health care response for (April 15, 2020). Because crewmembers
supplements the previously posted individuals, families, and businesses described in Section 3121(b)(20) of the
interim final rules by providing affected by the coronavirus pandemic. Code are treated as independent
additional guidance on certain eligible The Small Business Administration contractors or otherwise self-employed
payroll costs. (SBA) received funding and authority for certain federal tax purposes, fishing
DATES: through the CARES Act to modify boat owners have faced uncertainty
Effective Date: The provisions in this existing loan programs and establish a about whether to report payments to
interim final rule are effective June 26, new loan program to assist small such crewmembers as a payroll cost on
2020. businesses nationwide adversely their PPP loan applications.
Comment Date: Comments must be impacted by the COVID–19 emergency. On April 14, 2020, SBA, in
received on or before July 30, 2020. Section 1102 of the CARES Act consultation with Treasury, posted an
ADDRESSES: You may submit comments, temporarily permits SBA to guarantee interim final rule explaining that the
identified by number SBA–2020–0040 100 percent of 7(a) loans under a new self-employment income of the general
through the Federal eRulemaking Portal: program titled the ‘‘Paycheck Protection active partners of a partnership could be
http://www.regulations.gov. Follow the Program.’’ Section 1106 of the CARES reported as a payroll cost, up to
instructions for submitting comments. Act provides for forgiveness of up to the $100,000 annualized, on a PPP loan
SBA will post all comments on full principal amount of qualifying application filed by or on behalf of the
www.regulations.gov. If you wish to loans guaranteed under the Paycheck partnership.1 85 FR 21747, 21748 (April
submit confidential business Protection Program (PPP). 20, 2020). The Administrator, in
information (CBI) as defined in the User On April 24, 2020, the President consultation with the Secretary, has
Notice at www.regulations.gov, please signed the Paycheck Protection Program determined that the relationship of a
send an email to ppp-ifr@sba.gov. and Health Care Enhancement Act (Pub. fishing boat owner and a crewmember
Highlight the information that you L. 116–139), which provided additional described in Section 3121(b)(20) of the
consider to be CBI and explain why you funding and authority for the PPP. On Code is analogous to a joint venture or
believe SBA should hold this June 5, 2020, the President signed the partnership. For example, the fishing
information as confidential. SBA will Paycheck Protection Program Flexibility boat owner and crewmembers each
review the information and make the Act of 2020 (Flexibility Act) (Pub. L. contribute labor or resources to a
final determination whether it will 116–142), which changed provisions of common commercial enterprise, and the
publish the information. the PPP relating to the maturity of PPP owner and crewmembers share in the
loans, the deferral of PPP loan enterprise’s profits. In order to
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FOR FURTHER INFORMATION CONTACT: A
payments, and the forgiveness of PPP
Call Center Representative at 833–572– loans. 1 Guidance describing how to calculate
0502, or the local SBA Field Office; the This interim final rule addresses partnership PPP loan amounts and defining the self-
list of offices can be found at https:// payroll costs that may be included on a employment income of partners was posted on
www.sba.gov/tools/local-assistance/ PPP loan application submitted by April 24, 2020 (see How to Calculate Maximum
districtoffices. Loan Amounts, Question 4, at https://www.sba.gov/
certain boat owners or operators that are sites/default/files/2020-06/How-to-Calculate-Loan-
SUPPLEMENTARY INFORMATION: engaged in catching fish or other forms Amounts-508_0.pdf).
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Federal Register / Vol. 85, No. 126 / Tuesday, June 30, 2020 / Rules and Regulations 39067
harmonize SBA’s interim final rule under a new 7(a) loan program titled the Code for the particular fishing boat
regarding partnerships with SBA’s ‘‘Paycheck Protection Program.’’ Loans owner. The Administrator, in
interim final rule described above guaranteed under the Paycheck consultation with the Secretary, has
regarding independent contactors, the Protection Program (PPP) will be 100 determined that this restriction is
Administrator, in consultation with the percent guaranteed by SBA, and the full necessary to prevent fishing boat owners
Secretary, has determined that in the principal amount of the loans may and crewmembers from claiming
event of a conflict (i.e., a case where one qualify for loan forgiveness. The forgiveness for the same payroll costs
or more partners in a partnership are purpose of this interim final rule is to (for the owner’s PPP loan, the
treated as independent contractors for provide additional guidance concerning compensation to a specific
tax purposes), the rules regarding payroll costs that may be reported in crewmember; for the crewmember’s PPP
partnership will govern. Accordingly, as connection with certain PPP loan and loan, the compensation from the owner
described below, this interim final rule loan forgiveness applications. to that crewmember). As a result, only
(1) provides that a fishing boat owner 1. Calculation of Payroll Costs of Certain the crewmember’s PPP loan is eligible
may include compensation reported on Fishing Boat Owners for forgiveness, and the owner may not
Box 5 of Form 1099–MISC and paid to obtain forgiveness for any payroll costs
a crewmember described in Section May fishing boat owners include paid to the crewmember. The fishing
3121(b)(20) as a payroll cost in its PPP payroll costs in their PPP loan boat owner is responsible for
loan application, and (2) addresses a applications that are attributable to determining whether any of its
fishing boat owner’s eligibility to obtain crewmembers described in Section crewmembers during the covered period
loan forgiveness of payroll costs paid to 3121(b)(20) of the Internal Revenue for loan forgiveness received their own
a crewmember who has obtained his or Code? PPP loans. Due to the increased risk of
Yes. The Administrator, in duplicate payroll costs, PPP loans to
her own PPP loan.
consultation with the Secretary, has
fishing boat owners are more likely to be
II. Comments and Immediate Effective determined that the relationship of a
subject to an SBA loan review.
Date crewmember described in Section
This interim final rule is effective 3121(b)(20) of the Internal Revenue 3. Additional Information
without advance notice and public Code (Code) and a fishing boat owner or
operator (fishing boat owner) is SBA may provide further guidance, if
comment because Section 1114 of the needed, through SBA notices that will
CARES Act authorizes SBA to issue analogous to a joint venture or
partnership for purposes of the PPP. As be posted on SBA’s website at
regulations to implement Title I of the www.sba.gov. Questions on the
Act without regard to notice a result, a fishing boat owner may
include compensation reported on Box Paycheck Protection Program may be
requirements. In addition, SBA has directed to the Lender Relations
determined that there is good cause for 5 of IRS Form 1099–MISC and paid to
a crewmember described in Section Specialist in the local SBA Field Office.
dispensing with advance public notice The local SBA Field Office may be
and comment on the grounds that that 3121(b)(20) of the Code, up to $100,000
annualized, as a payroll cost in its PPP found at https://www.sba.gov/tools/
it would be contrary to the public local-assistance/districtoffices.
interest. Specifically, advance public loan application. The Administrator, in
notice and comment would defeat the consultation with the Secretary, has Compliance With Executive Orders
purpose of this interim final rule given determined that this treatment is 12866, 12988, 13132, 13563, and 13771,
that SBA’s authority to guarantee PPP appropriate to effectuate the purposes of the Paperwork Reduction Act (44
loans expires on June 30, 2020. These the CARES Act to provide assistance to U.S.C. Ch. 35), and the Regulatory
same reasons provide good cause for eligible PPP borrowers, including Flexibility Act (5 U.S.C. 601–612)
SBA to dispense with the 30-day business concerns that operate as
partnerships, affected by the COVID–19 Executive Orders 12866, 13563, and
delayed effective date provided in the 13771
Administrative Procedure Act (APA). emergency.
See 5 U.S.C. 553(b)(B). Although this 2. Calculation of Certain Payroll Costs This interim final rule is
interim final rule is effective on or Eligible for Loan Forgiveness economically significant for the
before date of filing, comments are May a fishing boat owner include as purposes of Executive Orders 12866 and
solicited from interested members of the payroll costs in its application for loan 13563, and is considered a major rule
public on all aspects of the interim final forgiveness any compensation paid to a under the Congressional Review Act.
rule, including Section III below. These crewmember who received his or her SBA, however, is proceeding under the
comments must be submitted on or own PPP loan and is seeking forgiveness emergency provision at Executive Order
before July 30, 2020. The SBA will for amounts of compensation the 12866 Section 6(a)(3)(D) based on the
consider these comments and the need crewmember received for performing need to move expeditiously to mitigate
for making any revisions as a result of services described in Section the current economic conditions arising
these comments. 3121(b)(20) of the Code with respect to from the COVID–19 emergency. This
III. Paycheck Protection Program— that owner’s fishing boat? rule’s designation under Executive
Additional Guidance on Certain No. If a fishing boat crewmember Order 13771 will be informed by public
Eligible Payroll Costs obtains his or her own PPP loan and comment.
seeks forgiveness of that loan based in Executive Order 12988
Overview part on compensation from a particular
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The CARES Act was enacted to fishing boat owner, the fishing boat SBA has drafted this rule, to the
provide immediate assistance to owner cannot also obtain PPP loan extent practicable, in accordance with
individuals, families, and organizations forgiveness based on compensation paid the standards set forth in Section 3(a)
affected by the COVID–19 emergency. to that same crewmember. This and 3(b)(2) of Executive Order 12988, to
Among the provisions contained in the restriction applies only if the minimize litigation, eliminate
CARES Act are provisions authorizing crewmember is performing services ambiguity, and reduce burden. The rule
SBA to temporarily guarantee loans described in Section 3121(b)(20) of the has no preemptive or retroactive effect.
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39068 Federal Register / Vol. 85, No. 126 / Tuesday, June 30, 2020 / Rules and Regulations
Executive Order 13132 time of promulgation or, if the rule is ADDRESSES: FAA Order 7400.11D,
SBA has determined that this rule promulgated in response to an Airspace Designations and Reporting
will not have substantial direct effects emergency that makes timely Points, and subsequent amendments can
on the States, on the relationship compliance impracticable, within 180 be viewed on line at http://
between the National Government and days of publication of the final rule. 5 www.faa.gov/air_traffic/publications/.
U.S.C. 604(a), 608(b). For further information, you can contact
the States, or on the distribution of
Rules that are exempt from notice and the Airspace Policy Group, Federal
power and responsibilities among the
comment are also exempt from the RFA Aviation Administration, 800
various layers of government. Therefore, requirements, including conducting a
SBA has determined that this rule has Independence Avenue SW, Washington,
regulatory flexibility analysis, when DC 20591; telephone: (202) 267–8783.
no federalism implications warranting among other things the agency for good
preparation of a federalism assessment. The Order is also available for
cause finds that notice and public inspection at the National Archives and
Paperwork Reduction Act, 44 U.S.C. procedure are impracticable, Records Administration (NARA). For
Chapter 35 unnecessary, or contrary to the public information on the availability of FAA
interest. SBA Office of Advocacy guide: Order 7400.11D at NARA, email
SBA has determined that this rule
How to Comply with the Regulatory fedreg.legal@nara.gov or go to https://
will not impose new or modify existing
Flexibility Act, Ch.1. p.9. Accordingly, www.archives.gov/federal-register/cfr/
recordkeeping or reporting requirements
SBA is not required to conduct a ibr-locations.html.
under the Paperwork Reduction Act. regulatory flexibility analysis.
FOR FURTHER INFORMATION, CONTACT:
Regulatory Flexibility Act (RFA) Jovita Carranza, John Fornito, Operations Support
The Regulatory Flexibility Act (RFA) Administrator. Group, Eastern Service Center, Federal
generally requires that when an agency [FR Doc. 2020–14128 Filed 6–26–20; 11:15 am] Aviation Administration, 1701
issues a proposed rule, or a final rule BILLING CODE 8026–03–P Columbia Avenue, College Park, GA
pursuant to Section 553(b) of the APA 30337; telephone (404) 305–6364.
or another law, the agency must prepare SUPPLEMENTARY INFORMATION:
a regulatory flexibility analysis that DEPARTMENT OF TRANSPORTATION
meets the requirements of the RFA and Authority for This Rulemaking
publish such analysis in the Federal Federal Aviation Administration The FAA’s authority to issue rules
Register. 5 U.S.C. 603, 604. Specifically, regarding aviation safety is found in
the RFA normally requires agencies to 14 CFR Part 71 Title 49 of the United States Code.
describe the impact of a rulemaking on Subtitle I, Section 106 describes the
[Docket No. FAA–2020–0164; Airspace
small entities by providing a regulatory Docket No. 20–ASO–3] authority of the FAA Administrator.
impact analysis. Such analysis must Subtitle VII, Aviation Programs,
address the consideration of regulatory RIN 2120–AA66 describes in more detail the scope of the
options that would lessen the economic agency’s authority. This rulemaking is
effect of the rule on small entities. The Amendment of Class D Airspace and promulgated under the authority
RFA defines a ‘‘small entity’’ as (1) a Revocation of Class E Airspace; described in Subtitle VII, Part A,
proprietary firm meeting the size Bogue, NC
Subpart I, Section 40103. Under that
standards of the Small Business AGENCY: Federal Aviation section, the FAA is charged with
Administration (SBA); (2) a nonprofit Administration (FAA), DOT. prescribing regulations to assign the use
organization that is not dominant in its ACTION: Final rule. of airspace necessary to ensure the
field; or (3) a small government safety of aircraft and the efficient use of
jurisdiction with a population of less SUMMARY: This action amends Class D airspace. This regulation is within the
than 50,000. 5 U.S.C. 601(3)–(6). Except airspace by updating the geographic scope of that authority as it amends
for such small government jurisdictions, coordinates, and removes Class E Class D airspace and removes Class E
neither State nor local governments are airspace extending upward from 700 airspace extending upward from 700
‘‘small entities.’’ Similarly, for purposes feet above the surface at Bogue Field feet above the surface at Bogue Field
of the RFA, individual persons are not Marine Corps Auxiliary Field, Bogue, MCALF, Bogue, NC, due to the airspace
small entities. NC, at the request of the US Marine no longer being necessary.
The requirement to conduct a Corps. Class E airspace is no longer
regulatory impact analysis does not required, as there are no instrument History
apply if the head of the agency ‘‘certifies approaches into Bogue Field MCALF. The FAA published a notice of
that the rule will not, if promulgated, This action also replaces the outdated proposed rulemaking in the Federal
have a significant economic impact on term Airport/Facility Directory with the Register (85 FR 14809, March 16, 2020)
a substantial number of small entities.’’ term Chart Supplement in the legal for Docket No. FAA–2020–0164 to
5 U.S.C. 605(b). The agency must, description of associated Class D amend Class D airspace by updating the
however, publish the certification in the airspace. This action enhances the geographic coordinates, and remove
Federal Register at the time of safety and management of controlled Class E airspace extending upward from
publication of the rule, ‘‘along with a airspace within the national airspace 700 feet above the surface at Bogue
statement providing the factual basis for system. Field Marine Corps Auxiliary Field,
such certification.’’ If the agency head DATES: Effective 0901 UTC, September Bogue, NC as the airport has no
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has not waived the requirements for a 10, 2020. The Director of the Federal instrument approaches. Therefore, the
regulatory flexibility analysis in Register approves this incorporation by Class E airspace is no longer necessary.
accordance with the RFA’s waiver reference action under Title 1 Code of This action enhances the safety and
provision, and no other RFA exception Federal Regulations part 51, subject to management of controlled airspace
applies, the agency must prepare the the annual revision of FAA Order within the national airspace system.
regulatory flexibility analysis and 7400.11 and publication of conforming Interested parties were invited to
publish it in the Federal Register at the amendments. participate in this rulemaking effort by
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