SBA / Treasury FAQ – 7. Section 7(a)(36)(A)(viii)(II) of the Small Business Act excludes from the definition of payroll costs any employee compensation in excess of $100,000 on an annualized basis...

Compliance > CARES Act
Q:  Section 7(a)(36)(A)(viii)(II) of the Small Business Act excludes from the definition of payroll costs any employee compensation in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred. Does that exclusion apply to all employee benefits of monetary value?
 
 
A:  No. The exclusion of compensation in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred, applies only to cash compensation, not to non-cash
benefits, including:

 
  • employer contributions to defined-benefit or defined-contribution retirement plans;
  • payment for the provision of employee benefits consisting of group health care or group life, disability, vision, or dental insurance coverage, including insurance premiums; and
  • payment of state and local taxes assessed on compensation of employees.
 
 
This Q&A was based on information contained in the Treasury Department’s March 12, 2021, version of “Paycheck Protection Program Loans, Frequently Asked Questions,” which is updated from time to time.  This CARES Act / SBA / PPP related issuance may be found here:  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf
 

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