What’s in the New COVID-19 Stimulus Bill for Businesses? by Andrew Leonard, CPA
Posted on December 28, 2020
by
Andrew Leonard
On December 27, President Trump signed the $900 billion economic-assistance package approved by Congress earlier in the week to help Americans weather the ongoing financial strains of the COVID-19 health crisis. The legislation calls for direct stimulus payments to qualifying taxpayers, an additional 11-weeks of federal emergency-unemployment benefits and greater flexibility for taxpayers to qualify for certain tax credits. Nevertheless, it is businesses that will receive the most generous benefits of the bill.
Here is a quick overview of some of the relief for businesses included in the Consolidated Appropriations Act of 2021.
- $284 billion allocated to a second round of Paycheck Protection Program (PPP) forgivable loans for eligible small businesses, including previous loan recipients and new borrowers;
- A retroactive repeal of previous PPP guidance prohibiting borrowers that receive loan forgiveness from deducting loan expenses;
- $20 billion allocated to Economic Injury Disaster Loan (EIDL) grants for businesses in low-income communities;
- $15 billion in funding for movie theaters, cultural institutions and live performance venues shuttered during the pandemic;
- An extension of the employee-retention tax credit (ERTC) through June 30, 2021, as well as an increase in the amount of the refundable credit employers may claim for wages paid to employees despite COVID-related business closures (from 50 of up to $10,000 in qualified wages paid to employees for the year to 70 percent of qualified wages up to $10,000 paid to workers during each quarter;
- A three-month extension (through March 31, 2021) of the refundable tax credits introduced by the Families First Coronavirus Response Act (FFCRA) for businesses that pay qualified wages and health care expenses to employees entitled to paid sick leave or expanded family and medical leave due to COVID-19;
- An extension of time for employers who deferred withholding of fourth quarter employees’ portion of Social Security Taxes to pay the deferred amount to the IRS by Dec. 31, 2021, rather than the previous deadline of April 30, 2021;
- A 100 percent deduction for food and beverage expenses incurred during a business meal provided by a restaurant for tax years 2021 through 2022 (currently restricted to 50 percent)
- A five-year extension of the look-through rules for foreign personal holding companies, which allow dividends, interest, rent and royalties earned or paid out between two or more related controlled foreign corporations (CFCs) to be excluded from U.S. corporate income tax.
For more details, including actionable strategies to help your business make the most of these provisions, sign up for Berkowitz Pollack Brant’s January 7 webinar here.
About the Author: Andrew Leonard, CPA, is a director with Berkowitz Pollack Brant’s International Tax Services practice, where he provides tax structuring, pre-immigration planning and a wide array of international tax and consulting services to international companies, entrepreneurs, families and foreign trusts. He can be reached at the CPA firm’s Boca Raton, Fla., office at (561) 361-2000 or info@bpbcpa.com.
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