As noted in our prior update, the U.S. Congress has approved the latest round of stimulus to help American businesses and individuals. Earlier this week, President Trump signed the legislation and government agencies are in the process of developing guidance for the rollout of this new law. In particular, the Consolidated Appropriations Act, 2021 addressed business requests related to the next rollout of Paycheck Protection Program (PPP) loans, PPP loan forgiveness, PPP expense deductibility, and individual stimulus. Congress may act yet again to increase economic impact payments from $600 to $2,000, as well as make other adjustments related to policy differences between Republicans and Democrats, but our expectation is that the key provisions for businesses will remain in place.
In addition to the noted high profile provisions in the Act, we also want to make you aware of other notable provisions:
- There were favorable changes to the Employment Retention Credit for businesses most affected by the Covid-19 pandemic. The credit rate was increased from 50% to 70% of qualified wages and the limit on per-employee wages is increased from $10,000 for the year to $10,000 per quarter. Additionally, the gross receipts eligibility threshold for employers was reduced from a 50% decline to a 20% decline in gross receipts for the same calendar quarter in 2019. Eligible employers may apply for the credit related to 2020 during 2021 to recoup this benefit.
- The Families First Coronavirus Response Credit (FFCRA) for emergency sick and child-care leave and related tax credits are extended through March 31, 2021 on a voluntary basis. Specifically, FFCRA leave is no longer mandatory, but employers that provide FFCRA leave from January 1 to March 31, 2021 may take a federal tax credit for providing such leave.
- Additional provisions related to short-term benefits for charitable donations, medical expenses, and business meals were also enacted under the Act. Congress also passed a number of tax ‘extenders’ that were expected to sunset on December 31, 2020 for another five years. These extenders include, but are not limited to, the New Markets Tax Credit, Health Coverage Tax Credit, and empowerment zone tax incentives. The Act also made permanent a number of provisions, including the commercial buildings energy efficiency tax deduction known as 179D (referring to Section 179D of the Internal Revenue Code).
For additional details, including a summary of these key provisions from the Act, please refer to our blog. You may also review our prior message from last week that contains highlights regarding the next rollout of the PPP, expense deductibility, and PPP loan forgiveness.
Our team continues to review the Act and keep our clients apprised as necessary. Additionally, RS&F continues to work with clients regarding PPP loan forgiveness and tax planning as well as other provisions of federal stimulus measures and the CARES Act.
Please contact your RS&F Client Advisor for assistance with any PPP, stimulus, or planning matters as we near the end of 2020 and finally begin 2021.