Posted on 12/29/20
On strong bipartisan votes the House and Senate both overwhelmingly approved new COVID-19 relief measures. The bill, H.R. 133, also contains government funding for the balance of fiscal 2021. President Trump signed the bill into law on Sunday, Dec. 27, 2020.
The new relief package makes more than $900 billion available to provide for unemployment aid, direct payments, and business loans.
Noted below are summaries of certain provisions that may be of interest to NTEA members.
Paycheck Protection Program (PPP)
The Paycheck Protection Program receives additional funding through March 31, 2021. The new funding allows for the possibility of second loans and expands the eligibility for first-time small business borrowers.
Second-time loans are limited to businesses with less than 300 employees. Also, the applicant must have experienced at least a 25 percent drop in gross receipts in a 2020 quarter compared to the same quarter in 2019. Loans for second-time borrowers are limited to $2 million.
The bill allows businesses that take both a PPP loan and the Employee Retention Tax Credit (ERTC).
A major clarification included in the legislation concerns deductibility of expenses paid with PPP funds. Businesses can deduct expenses paid with forgiven PPP loans. This applies to both old and new loans.
Economic Injury Disaster Loan Program (EIDL) & Small Business Administration (SBA) Debt Relief Payments
Provides additional funding for new EIDL grants (economic injury disaster loan program) and for Small Business Administration (SBA) debt relief payment.
Employee Retention Tax Credit
Extends the Employee Retention Tax Credit through July 1, 2021. The bill also increases the maximum refundable payroll tax credit from $5,000 to $14,000 (changing the calculation from 50 percent of wages paid up to $10,000 to 70 percent of wages paid up to $10,000 for any quarter).
Deferred Payroll Tax Credits
The Families First Coronavirus Response Act allowed employers to defer withholding employees’ social security taxes from September 1, 2020 through December 31, 2020. Those deferred taxes were to be withheld and repaid between January 1, 2021 and April 31, 2021. Beginning on May 1, 2021, penalties and interest on deferred unpaid tax liability were to begin accruing.
The new law extends the repayment period through December 31, 2021. Penalties and interest on deferred unpaid tax liability will not begin to accrue until January 1, 2022.
Extension of credits for paid sick and family leave.
The refundable payroll tax credits for paid sick and family leave from the second coronavirus relief package are extended through the end of March 2021.
Flexible Savings Accounts
The new law allows unused Flexible Savings Account (FSA) balances to be rolled over from the 2020 tax year into 2021, and 2021 into 2022.
Deduction for Business Meals
Increases the deduction for business meals to 100% for 2021 and 2022.
Not included in the bill
In order to get bipartisan support for the bill Congressional leaders decided to exclude two issues from the relief measure – funding to state and local governments and COVID-related liability protection for businesses.
The next Congress and the incoming Biden administration may consider these and additional stimulus relief in 2021.