Daily Update COVID-19 From the Business Accountants at Wouch Maloney

Second COVID-19 Stimulus Package Agreed Upon and Sent for Vote – PPP, Unemployment and More Relief Included

We have received many calls and emails regarding the revised COVID-19 Relief Package that was approved and sent on for a vote in the House and Senate.

Highlights of the second COVID-19 stimulus package are:

Unemployment insurance

  • The bill enhanced unemployment insurance benefits through the Federal Pandemic Unemployment Compensation (FPUC) program. It provides an additional $300 per week to supplement all state and federal unemployment benefits, starting after December 26, 2020 and ending March 14, 2021.
  • Extends the Pandemic Unemployment Assistance (PUA)program, which provides continued unemployment assistance to the self-employed, freelancers, gig workers, part-time workers and other individuals in non-traditional employment. It also increases the number of weeks of PUA benefits an individual may claim, from 39 to 50.

Small business loans

  • This bill includes $284 billion for the Paycheck Protection Program (PPP) and extends PPP through March 31, 2021.
  • $12 billion of which is earmarked for minority-owned businesses and $15 billion of which will go to live venues, independent movie theaters and cultural institutions.
  • Provides a second PPP forgivable loan for the hardest-hit small businesses and non-profits with 300 or fewer employees and that can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019;  Adds PPE expenses, costs associated with outdoor dining, and supplier costs as eligible and forgivable expenses.
  • Allows for small businesses in the restaurant and hospitality industries to receive larger awards of 3.5 times average total monthly payroll, rather than 2.5 times.
  • It also expands PPP eligibility to include nonprofits and local newspapers, TV and radio broadcasters.
  • The bill specifies that forgiven Paycheck Protection Program (PPP) loans will not be included in taxable income. It also clarifies that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan, effective as of the date of enactment of the CARES Act and applicable to subsequent PPP loans. This same tax treatment also applies to EIDL grants and certain loans and loan repayment assistance.
  • EIDL Grant ProgramThis bill includes $20 billion for EIDL Advance grants. Small businesses and nonprofits in low-income communities are eligible to receive $10,000 grants. Any small businesses and nonprofits in low-income communities that received an EIDL Advance previously are also eligible to receive the full $10,000 if their award was less in the first round of grants.

Stimulus checks

  • Additional round of Economic Impact Payments of $600 for individuals making up to $75,000 per year and $1,200 for couples making up to $150,000 per year, as well as a $600 payment for each child dependent. This means a family of four will receive $2,400 in direct payments.

Rental relief

  • The bill provides $25 billion in rental relief, which can be used for future rent and utility payments as well as for any back rent owed or utility bills that have not been paid since the beginning of the pandemic. It also extends the nationwide eviction moratorium through January 31, 2021.

Tax Provision

  • Extension and Expansion of the Employee Retention Tax Credit (ERTC): The bill importantly extends and expands the refundable Employee Retention Tax Credit (ERTC), which was established in the CARES Act. The extension of this tax credit, through July 1, 2021, will help keep additional U.S. workers on payroll and more small businesses and nonprofits across the country afloat. Specifically, this legislation, among other changes:
    • 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%; and
    • Modifies the threshold for treatment as a ‘large employer’ by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees.
  • Special “lookback” for EITC and CTC: The bill includes a special temporary rule allowing lower-income individuals to use their earned income from tax year 2019 to determine the Earned Income Tax Credit and the refundable portion of the Child Tax Credit (i.e., the Additional Child Tax Credit) in the 2020 tax year. This will help workers who experienced lower wages this year, due to the pandemic, to get a larger refund that is consistent with their earnings from prior filing seasons.
  • Extension of Paid Leave Credits: The bill extends the refundable payroll tax credits for paid sick and family leave that were established in the Families First Coronavirus Response Act, through March 31, 2021.
  • Relief for Individuals with Flexible Spending Arrangements (FSAs): The legislation provides relief for individuals with health and dependent care FSAs, ensuring U.S. workers and families do not unfairly lose out on these employer-sponsored benefits at the end of the year, through no fault of their own. Specifically, it allows individuals to carryover any unused health and dependent care FSA benefits from 2020 into the 2021 plan year, along with other FSA plan flexibilities.

Other Industry Provisions

Transportation – This bill includes $45 billion in transportation funding to provide relief to transit agencies, airlines and airline contractors, state transportation agencies, airports, Amtrak, and private motor coaches, school buses, and ferries, which have all been significantly impacted by coronavirus

Education bill provides $81.88 billion in education funding to provide relief to states, K-12 institutions, and higher education institutions that have all been significantly impacted by coronavirus. These funds are flexible and can be used on a variety of things to provide educational services to students and support the on-going functionality of school districts and colleges and universities

Child CareThis legislation provides $10 billion in emergency funds for child care providers through the Child Care and Developmental Block Grant (CCDGB) program. These grants provide immediate relief to child care providers who and are currently in operation or have been temporarily closed due to the pandemic. Providers will have flexibility in their use of funds, including personnel costs; sanitization and cleaning; personal protective equipment, fixed costs, rent, utilities, and other child care related services.

Health Care Provider Support Essential funding for vaccine procurement and distribution, providing roughly $20 billion  for procurement of vaccines and therapeutics, nearly $9 billion to the CDC and states for vaccine distribution. The bill provides more than $22 billion, all sent directly to states, for testing, tracing and COVID mitigation programs.

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.