I am advising a Church who is in the Forgiveness process for a PPP Loan. The lender Wells Fargo disputes our calculation of the maximum loan amount.
The church's employee, the pastor has opted out of Medicare & Social Security withholding. I am looking for others who have received SBA or lender approval for a PPP Max Loan Amount calculation that adjusts for the Medicare withholding situation.
Here's the case we make to Wells Fargo.
"Sirs, your calculation of maximum loan amount using Total Medicare Wages (Form 941 Line 5c Column 1) follows SBA guidelines. However, those guidelines do not correctly calculate the wages for an employer who has an employee that is not subject to Medicare deduction withholding. It is common and legal practice for clergy to not have social security and medicare withheld. https://www.irs.gov/businesses/small-bu ... the-clergy
Our payroll provider ADP removes this employee's wages from the Total Medicare Wages field (Form 941 Line 5c Column 1) since she does not have Medicare withheld. ADP has confirmed this and we are awaiting a detailed report from ADP showing the exact amount of wages removed from the form 941 each quarter.
Please approve our calculation of PPP Maximum Loan Amount and PPP Forgiveness application."