On Dec. 21, 2020, Congress passed the $2.3 trillion Consolidated Appropriations Act, 2021, H.R. 133 (a/k/a “Coronabus”), a $900 billion coronavirus relief bill merged with a $1.4 trillion omnibus spending bill for FY21. The 5,593-page legislative package was signed by the President on Dec. 27 and following is a summary of key provisions for IHA members:
COVID Relief Bill Small Business Provisions
- Extends Paycheck Protection Program (PPP) forgivable loans through March 31, 2021.
- Permits second PPP loans for small businesses with less than 300 employees and can show a loss of 25% of gross receipts in any quarter during 2020 compared to the same quarter in 2019.
- Maximum amount for “second draw” PPP loans reduced to $2 million.
- Expands non-payroll list of eligible expenses for PPP loans.
- Simplifies PPP loan forgiveness applications for loans under $150,000.
- Clarifies that deductions are allowed for expenses paid with forgiven PPP loan proceeds.
- Extends and expands the Employee Retention Tax Credit (ERTC) through June 30, 2021:
- Increases the credit rate from 50% to 70%;
- Raises the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter;
- Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50% to 20%;
- Increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees; and
- Provides that employers who receive PPP loans may qualify for the ERTC with respect to wages not paid with forgiven PPP loans (retroactive to the CARES Act – March 17, 2020).
- Extends refundable payroll tax credits for required COVID-related paid sick and family leave established in the Families First Coronavirus Response Act through March 31, 2021.
- Restores the federal supplement to state unemployment insurance benefits after Dec. 6, 2020 and ending March 14, 2021, but lowers the amount from $600 to $300 per week.
Other Business Provisions
- Small Business Administration Economic Injury Disaster Loans received more funds and the deadline to apply for a COVID-19 pandemic EIDL has been extended to Dec. 31, 2021. These loans are offered at a 3.75% for small businesses, with a 30-year maturity and an automatic deferment of one year before monthly payments begin.
- IRC Sec. 501(c)(6) associations are now eligible for PPP loans based on meeting certain criteria.
- The tax deduction for restaurant business meals has been restored to 100% for 2021 and 2022.
- The Controlled Foreign Corporation (CFC) Look-Thru Rule IRC Sec. 954(c)(6), has been extended five years so American companies can continue to redeploy capital from active foreign business operations among their foreign subsidiaries without incurring additional tax costs.
With the signing of a new legislative package on Dec. 27, there are many useful resources available for businesses to counter the difficult impacts of the global pandemic. Provisions cover a multitude of options which are either new or extensions of previous provisions from previous legislative aid.