$900B COVID-19 Aid Package is in the final stages of being signed into law.
Published December 22, 2020
Some of the highlights from the bill include the following:
Expansion and changes to PPP Forgivable Loans:
- Allows for the deduction of expenses paid with the proceeds of a PPP loan that is forgivable and keeps the proceeds nontaxable.
- Funding for a second round of PPP forgivable loans to small businesses and nonprofits experiencing a 25% revenue loss in any calendar quarter in 2020, when compared to the same quarter in 2019. These businesses cannot have more than 300 employees. Loan size will be calculated at 2.5 times average monthly payroll costs, up to $2M. Allows small businesses assigned to the industry NAICS code 72 (Accommodation and Food Services) 3.5 times average monthly payroll and maintains the existing expansions in eligibility for these businesses.
- Expansion of allowable and forgivable expenses to include supplier costs on existing contract and purchase orders.
- Simplifies the forgiveness application process for smaller loans up to $150,000, while increasing SBA’s ability to audit and review forgiven loans.
- Expands PPP eligibility for certain 501(c)(6) nonprofits and Destination Marketing Organizations (DMO’s) with 300 or fewer employees that do not receive more than 15% of their revenue from lobbying.
- Eliminates the requirement that EIDL advances be subtracted from PPP forgiveness.
Support to Venues – Funding for grants to shuttered venues. Establishes a $15 Billion grant program to support shuttered live venues, theaters, museums and zoos that have experienced significant revenue losses.
Individual rebates for individuals – $600 per eligible family member with phaseouts beginning at $75,000 of modified adjusted gross income ($112,500 for heads of household and $150,000 for married filing jointly.)
Extended unemployment benefits – Adding $300 in unemployment benefits for 11 weeks. Also extended two other unemployment programs, which expand the eligibility of unemployment benefits and extend their duration to begin phasing out in mid-march and end in early April.
Extension of deferred payroll taxes – The deferral of employees’ share of social security taxes from September 1, 2020 through December31, 2020 repayment is extended until December 31,2021.
Extension of credits for paid sick and family leave – Extends the refundable payroll tax credits for paid sick and family leave, enacted in the Families First Coronavirus Response Act, through the end of March, 2021.
Technical improvements to credits for paid sick and family leave. Makes technical changes coordinating the definitions of qualified wages within the paid sick leave, paid family and medical leave, and the exclusion of such leave from employer OASDI tax. This provision is effective as if included in FFCRA
Expanded Meals deduction – Allowing 100% deductibility of Meals in order to help the restaurant industry for tax years 2021 and 2022.
- Please note: this does not apply to tax year 2020
Tax Extenders – For tax benefits that were set to expire at the end of December 31, 2020 have been extended at least for another year. Some have been made permanent. (More details to come – watch for future communications specific to tax extenders.)
This bill will require much guidance that we will have to wait for and it is not expected that the guidance and new PPP applications and forgiveness forms will come out until January, 2021. We will be watching for that guidance and will follow up with additional information as soon as it is received.