The House and Senate passed a $900 billion coronavirus relief bill – the Coronavirus Response and Relief Supplemental Appropriations Act – which ensures tax deductibility for business expenses paid with forgiven PPP loans, provides fresh PPP funding, makes Sec. 501(c)(6) not-for-profit organizations eligible for loans for the first time, and offers businesses facing severe revenue reductions the opportunity to apply for a second loan.
UPDATE: The legislation – attached to the Consolidated Appropriations Act, 2021 – was finally signed into law by President Trump on December 27th.
Below are some highlights of the bill:
Tax Treatment of PPP Loans
The bill specifies that forgiven Paycheck Protection Program or 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.
Unemployment Insurance
The bill provides an additional $300 per week to supplement all state and federal unemployment benefits, starting after December 26, 2020 and ending March 14, 2021.
Direct Payments
One-time direct payments of $600 for individuals making up to $75,000, and $1,200 for couples making up to $150,000, as well as an extra $600 per eligible child dependent.
Employee Retention Credit
The bill extends and expands the refundable Employee Retention Tax Credit through July 1, 2021 while increasing the credit rate from 50% to 70%.
Additional Funding for PPP
The coronavirus relief bill provides a second PPP forgivable loan for the hardest-hit small businesses and non-profits with 300 or fewer employees that can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019. It also 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.
Additionally, the bill provides funding for vaccine distribution, food assistance, and money for education and child care.
For a more detailed analysis, click here.
Check our COVID-19 Resource Center for ongoing news and resources.
More information can be found in this Journal of Accountancy article, and in this video interview with AICPA President Barry Melancon and CPA.com CEO Erik Asgeirsson.