By Vincent J. Nadder, CPA, Tax Partner and Scott Zickefoose, CPA, CM&AA, Transaction Advisory and Tax and Partner
Overview of Additional Coronavirus Relief for Businesses and Taxpayers
On Monday, December 21, 2020, Congress passed a $900 billion relief package in response to COVID-19 in connection with its annual spending bill (Additional Coronavirus Response and Relief). This bill is intended to address many items ranging from vaccine distribution to support for small businesses and taxpayers facing economic uncertainty.
While the bill contains many detailed provisions which the Keiter team is still working to digest, our team wanted to send a brief update containing the highlights. The bill is pending the President’s signature, which is expected soon.
Key Provisions in COVID-19 Relief Package
- This legislation overrides the Internal Revenue Service’s position on taxability of Paycheck Protection Program loan forgiveness and makes clear that the expenses paid with loan proceeds will be tax-deductible.
- $284.45 billion set aside for a second draw of Paycheck Protection Program loans for qualifying borrowers. To qualify, a borrower must employ not more than 300 employees and have experienced a 25% or greater decline in revenues for any quarter in 2020 (as compared to the same quarter in 2019). A qualifying borrower may borrow up to 2.5 months of average payroll or $2 million, whichever is less (Companies with NAICS Codes beginning with 72, Accommodation and Food Services, can apply for up to 3.5 months of average payroll).
- Congress expanded allowable ‘non-payroll’ costs that are eligible for forgiveness to include categories such as Covered Operations Expenditures, Covered Property Damages, Covered Supplier Costs, and Covered Worker Protection Expenditure. A separate discussion of these new categories will be provided at a future time.
- An extension of Section 1112 of the CARES Act, which provides payment of principal, interest, and associated fees on qualifying SBA 7(a) loans (subject to limitations). Special provisions are contained for borrowers categorized with NAICS codes beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812.
- Expanded business meals deduction for food and beverage provided by a restaurant, making qualified business meals 100% deductible if paid or incurred after December 31, 2020, and before January 1, 2023.
- An extension of unemployment benefits through March 14, 2021, with additional weekly payments of $300 (previously unemployment recipients received $600 per week which expired in July 2020).
- Stimulus payments of $600 per qualifying person for taxpayers making less than $75,000 annually (or $150,000 if married filing joint).
There are many other provisions contained within this new legislation and your Keiter team is working to disseminate this information in the coming days. If you have questions about the legislation and how it may impact you or your business, please reach out to your Keiter Opportunity Advisor.
ADDITIONAL PAYCHECK PROTECTION PROGRAM AND COVID-19 BUSINESS PLANNING RESOURCES
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.