By now we are sure you have heard that President Trump signed the Consolidated Appropriations Act, 2021. While the stimulus checks have been getting the bulk of the attention, we wanted to share some of the other details that may impact you.
Key provisions of the $900 billion spending bill include:
$325 billion in aid for small businesses, including $284 billion to the U.S. Small Business Association (SBA) for first and second PPP forgivable small business loans (see more on this below). In addition, $20 billion is allocated to provide Economic Injury Disaster Loan (EIDL) Grants to businesses in low-income communities.
Economic impact payments of $600 for individuals making up to $75,000 per year and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent.
$300 per week unemployment benefit supplement from Dec. 26 until March 14, 2021. The bill also extends the Pandemic Unemployment Assistance (PUA) program, with expanded coverage to the self-employed, gig workers, and others in nontraditional employment, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits.
Extending the employee retention tax credit into 2021; increases the credit to 70 percent (from 50 percent) of qualifying wages; and increases the limit on creditable wages to $10,000 per quarter (instead of per year).
Allowing small employers that received PPP loans to use the employee retention tax credit to cover other wages.
In 2021 and 2022, allowing a 100% deduction for the cost of business meals as long as the expense is for food or beverages provided by a restaurant.
Extending the deadline by which employers who deferred employees' payroll taxes need to increase their employees' withholding and pay the taxes owed. The deferred taxes must now be paid by the end of 2021 (originally due on April 30, 2021).
Extending CARES Act charitable giving incentives (charitable deductions up to 100% of AGI and $300 above-the-line charity deductions) into 2021.
Extending retirement plan distribution relief into 2021.
PPP Provisions (for both first-time and repeat PPP borrowers):
Borrowers making the request must have fewer than 300 employees.
Borrowers must have suffered a revenue decrease of at least 25% during one of the first three quarters of 2020, or during Q4 2020 (if applying after January 1, 2021). The decrease is determined by comparing gross receipts in a quarter to the same quarter in the prior year.
The maximum loan amount an eligible company can receive is the lesser of $2 million or 2.5X monthly payroll costs incurred during the one-year period before the loan is made, or during calendar year 2019 (3.5X monthly payroll if the entity's NAICS code is 72).
Qualified expenses paid with PPP funds are now tax deductible.
Allowable and forgivable PPP expenses are expanded to include operating expenses, property damage costs (caused by acts of civil unrest), supplier costs and worker protection costs (both operating and capital costs).
Borrowers can now choose any 8- to 24-week period as their loan forgiveness covered period.
Grants received as part of an Economic Injury Disaster Loan (EIDL) will no longer reduce PPP forgiveness.
A simplified forgiveness application for PPP loans of less than $150,000 will be limited to borrower certifications.
Forgiven PPP loan funds will be considered tax-exempt income (and will increase owners' basis in pass-through entities).
We hope that you found this article helpful. And again, we are available if you have questions, concerns or need assistance.
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