Consolidated Appropriations Act, 2021
Dear Clients and Friends:
On Monday, the House of Representatives passed a $900 billion COVID-19 relief bill. A summary of the key provisions can be found below. For further information, please see the Journal of Accountancy article located HERE.
- Clarifies certain provision related to existing PPP loans
- Specifies that business expenses paid with forgiven PPP loans are tax-deductible (this supersedes IRS Notice 2020-32).
- Repeals the requirement that PPP borrowers have to pay back the EIDL advance.
- Creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount.
- Provides new PPP funding (PPP2)
- Borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1.
- Offers businesses facing severe revenue reductions the opportunity to apply for a second loan.
- Borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, subject to a $2 million maximum.
- PPP2 loans will be available to first-time qualified borrowers and, for the first time, to businesses that previously received a PPP loan.
- Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they meet certain conditions:
- Have 300 or fewer employees.
- Have used or will use the full amount of their first PPP loan.
- Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
- Expands allowable costs to include, among other items, COVID-19 related facility modifications, PPE and cloud computing costs.
- Includes Sec. 501(c)(6) not-for-profit organizations as eligible for the program.
- Provides $600 stimulus payments to 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.
- Adds $300 to extended weekly unemployment benefits until March 14, 2021.
- 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.
- Extends emergency rental aid and an extension of the national eviction moratorium through Jan. 31, 2021.
- Extends the employee retention tax credit and several expiring tax provisions
- Temporarily allows a 100% business expense deduction for meals (rather than the current 50%) as long as the expense is for food or beverages provided by a restaurant. This provision is effective for expenses incurred after Dec. 31, 2020, and expires at the end of 2022.