December 22, 2020
Congress has passed another massive COVID-19 relief package and President Trump is expected to sign it shortly. The Bill includes MANY provisions including various tax extenders and appropriations. In this article, we have summarized only a few provisions that will have a sizable impact on many individuals and businesses or are critical for those businesses most impacted by COVID-19.
Individual Relief
- New stimulus checks of $600 per adult and qualifying child with the same income thresholds as the first round (phaseout begins at $75,000 single, $150,000 married filing jointly). Reconciliation of the payment is on 2020 tax filings if income eligible in 2020.
- Expanded unemployment assistance for 11 additional weeks with a $300 weekly supplemental benefit.
Paycheck Protection Program (PPP) Relief
- PPP expenses are now deductible, making the program truly not-taxable.
- A simplified forgiveness application is available for loans less than $150K.
- PPP Round #2 for small businesses that have sustained a 25% revenue loss in any quarter of 2020 compared to 2019 (300 or fewer employees - $2M maximum loan). Loans again are 2.5x monthly payroll but increased to 3.5x monthly payroll for the restaurant and hospitality industry (NAICS 72 businesses). Funds are available until 3/31/2021.
- Expanded eligibility for PPP for some borrower types that were not allowed in the first round (501c6's and others) and expanded eligible nonpayroll expenses.
- PPP forgiveness is no longer reduced for Economic Industry Disaster Loan (EIDL) advances made up to $10,000. Anyone receiving forgiveness already will be made whole.
Other Business Relief
- Extension of Families First Coronavirus Response Act (FFCRA) paid sick leave credits for COVID-19 reasons until March 31, 2021.
- Expansion and extension of the Employee Retention Tax Credit (ERTC).
- Businesses are now allowed to qualify for ERTC even if they have PPP loans, as long as the same wages are not used for both. This applies retroactively.
- ERTC is expanded for Q1 and Q2 2021 from 50% to 70% of qualified wages of $10,000 per quarter.
- Starting January 1, 2021, gross receipts decline now only 20% to qualify (down from 50%) and the 100-employee wage type limitation is expanded to 500.
- SBA grants for live venues:
- Must be a live venue operator or promoter, theatrical producer, performing arts organization operator, museum, theatre, or talent representative.
- Must demonstrate a 25% reduction in revenues. Grants will go out in rounds based on the hardest hit revenue losses first.
- Initial grant of 45% of 2019 revenues and a second grant of half that amount up to $10M total.
- Various other restrictions apply.
- Tax-free treatment of SBA loan payments, EIDL advances, and live venue grants.
- New principal and interest payments covered for SBA loans 7(a), 504, and Microloan programs. The program will be for three months starting in February 2021 and will be capped at $9,000 per month of payment. Hardest-hit borrowers will receive an additional five months capped at $9,000 per month (food service, accommodation, arts, entertainment, recreation, education, laundry, and personal care services).
- EIDL Advance Grants will be available again but focused on the hardest-hit businesses.
- Full deductibility of business meals, from a restaurant, for 2021 and 2022 instead of 50% under the current law.
Please reach out to your Trout CPA professional for additional assistance. We will be updating our website regularly as more information becomes available and providing further insights in the future via e-mails, videos, or webinars.
