This year has finally come to an end and as I prepare for the coming tax season, I wanted to inform everyone about the Coronavirus Relief and Government Funding Bill that was signed into law on December 27, 2020.
Many businesses and individuals are still suffering and struggling to survive, while I did hope for better benefits for individuals, I am happy to see that they did approve much needed aid for businesses.
Here is a summary of what you need to know:
Continued assistance for unemployed workers
The bill extends the Pandemic Unemployment Assistance (PUA) benefits, from December 31, 2020, to March 14, 2021. Individuals will be eligible for up to 50 weeks of PUA. Those who are already receiving the PUA benefits will continue to be eligible for up to a total of 50 weeks. However, no individual will be eligible to receive PUA after April 5, 2021.
The benefits on the Federal Pandemic Unemployment Compensation (FPUC), an additional $300 per week, begins after December 26, 2020, and ends before March 14, 2021, for up to 24 weeks of unemployment. Individuals who are already receiving FPUC will continue to receive FPUC until they have exhausted all of it. However, no individuals will be eligible to receive FPUC after April 5, 2021.
It also extended the eviction moratorium through January 31, 2021.
A refundable tax credit of $600 will be sent out. As per the last stimulus in the CARES Act, the rebate phases out at an adjusted gross income of $75,000 for singles, $112,500 for heads of household and $150,000 for married filing jointly. In addition, those with qualifying children (under 17) will receive $600 for each child.
Clarification of Tax Treatment of Forgivingness of PPP Loans
This is great, as it had me worried for many small businesses. The CARES Act provided that amounts forgiven under the PPP loan provisions should be excluded from gross income, however, in May, 2020, the Department of Treasury provided guidance that any expenses from the forgiven PPP loan would be treated as non-deductible expenses. The GOOD NEWS- this bill clarifies that those expenses related to a forgiven PPP loan will continue to be deductible according to normal tax rules.
The same treatment applies to the emergency EDIL grants and the loan repayment assistance for certain SBA loans.
Students that receive grants of emergency aid from an institution of higher education, pursuant to emergency financial aid, may be excluded from the taxable income of the recipient.
Continuing the Paycheck Protection Program
This bill adds eligibility to housing cooperatives, destination marketing organizations, certain 501(c)(6) organizations and certain individual stations, newspapers, and public broadcasting organizations.
It expands the allowable uses of the PPP loan proceeds to include covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures and extends the covered period to utilize PPP funds to March 31, 2021. It also expands the definition of payroll costs to include group life, disability, vision, and dental insurance benefits.
It permits PPP borrowers that have not yet received loan forgiveness and returned all or part of a PPP loan or did not take the full amount of a PPP loan to request a modification to the loan in the amount of the difference.
There is NOW a simplified loan forgiveness process for PPP loans of less than $150,000.
Businesses that received a PPP loan and used the full amount of the loan, are eligible for a Second PPP Loan, if the company has fewer than 300 employees and had gross receipts during a specified quarter 2020 that reflect at least a 25% reduction from the gross receipts of the company during the same quarter in 2019.Companies can only receive one PPP Second Draw Loan.
The maximum loan amount is the lesser of 2.5 times the average monthly payroll costs or $2 million. There are different methods for calculating the maximum eligible loan amount for seasonal employers and companies that were not in business for the one-year period prior to February 15, 2020.
For loans of $150,000 or less, the applicant may submit a certification attesting to its eligibility for the applicable revenue loss requirement. The applicant must submit supporting documentation on or before its submission of its loan forgiveness application.
The loan forgiveness on the second PPP Loans is eligible for full loan forgiveness based on the following eligible costs incurred or expenditures made during the covered period:(i) payroll costs; (ii) interest on a covered mortgage obligation; (iii) covered operations expenditure; (iv) covered property damage cost; (v) payment on a covered rent obligation; (vi) covered utility payment; (vii) covered supplier cost; and (viii) covered worker protection expenditure. For loan forgiveness purposes, at least 60% of the loan proceeds must be used for payroll costs.
Grants for Shuttered Venue Operators
This bill authorizes $15 billion for the SBA to make grants to eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25 percent reduction in revenues. The SBA may make an initial grant of up to $10 million to an eligible person or entity and a supplemental grant that is equal to 50 percent of the initial grant. The grants shall be used for specified expenses such as payroll costs, rent, utilities, and personal protective equipment.
Targeted EIDL Advance for Small Business Continuity
The bill provides for additional funding for EIDL Advances for eligible entities located in low-income communities, but limits the EIDL Advance amount for entities in low-income communities that previously received an Emergency EIDL Grant to the difference between the previously received grant and $10,000. It requires that the administrator of the grants notify eligible entities that they may be eligible for an EIDL Advance if: (1) the entity previously received an Emergency EIDL Grant; and (2) entities that applied for, but did not secure an Emergency EIDL Grant because of funding unavailability. It allocates $20 billion to EIDL Advances provided under this section and extends the covered period to December 31, 2021.
Emergency EIDL Grants
The coverage is extended through December 31, 2021. It repeals the EIDL Advance Deduction. It eliminates the requirement that PPP borrowers deduct the amount of an EIDL advance from their PPP forgiveness amount.
There is a lot more in this bill, some which should not have been added in, but for now you received the biggest take away. As always, we are here to assist you with whatever you may need. Do not be weary to express your needs. We understand that everyone is going through a hard time and we will continue to do what we can to help you through it.
I look forward to seeing you or speaking with you real soon and do not forget we have a new office located at 127 W. Washington Street in Minneola, next to the Minneola Post Office across from RaceTrac.
HAPPY NEW YEAR!