New Stimulus Bill Passed, Relief for Small Businesses
On Monday, December 21, 2020, Congress gave small businesses and suffering Americans an early holiday gift, passing a bipartisan bill providing more pandemic-related relief and clarifying the intent of previous legislation. The bill was sent to President Trump for signature. However, the President delayed signing the bill until Sunday, December 27, 2020. After several days of resistance, he disagreed with several portions of the bill, including the amount of the stimulus checks to most Americans and what he considered some unnecessary spending.
Of most importance to small businesses is the deductibility of forgivable Payroll Protection Program (PPP) loan-related expenses, which the IRS had previously indicated would not be deductible for tax purposes, will now be deductible.
The latest COVID relief bill states "no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by" the loan forgiveness provision that says forgiven PPP loans will not count as income. The American Institute of Certified Public Accountants (AICPA) and others lobbied hard to get this matter clarified. Congress agreed it was always their intent that the loan forgiveness would not be taxable and related expenses would be deductible.
Another facet of the bill is additional PPP loans of $284 billion. The bill provides additional funding for those businesses that did not receive PPP money in the first round, especially minority and women-owned businesses. In addition, it allows businesses a second chance at PPP money if they can show losses of 25% or higher in 2020 over their 2019 revenue.
In total, the bipartisan bill contains an additional $900 billion of COVID-related relief for businesses and individuals, including:
$325 billion for small business including more PPP funds;
$12 billion for low-income and minority community support;
$120 billion in additional $300 per week in unemployment benefits;
$166 billion in direct payments to individuals of $600, including children (subject to AGI maximums);
$45 billion for transportation;
$69 billion for vaccines and other COVID-related testing, tracing and mitigation programs;
$82 billion for schools;
$25 billion for rental assistance;
$26 billion for nutrition programs and agriculture assistance;
$10 billion for childcare;
$7 billion for broadband;
$13 billion in miscellaneous provisions.
Please contact us if you would like more information or need assistance with PPP loan applications, PPP loan forgiveness documentation, or 2020 tax planning.
About the Author - Jan Forgue is a senior manager in the assurance group. In addition to planning and managing client attest engagements, she performs firm quality control responsibilities including engagement quality control reviews, coordination of annual monitoring and inspection procedures, update of the firm's quality control policies and practice aids, and provides assistance with complex accounting issues. She assists in the expansion of the firm's attest practice, including peer review and accounting and attest consulting services. She is considered a subject matter expert in the employee benefit plan area. She also assists in developing staff through leading in-house training and identifying external CPE opportunities, on-the-job-training, and technical research skills.