Congressional leaders have agreed to a $900 billion pandemic relief bill outlined over more than 5,500 pages of text. A vote is imminent this evening approving the package, which will provide relief to struggling businesses and households. Households will see stimulus checks and enhanced federal unemployment benefits. A bigger piece repurposes $429 billion in unused funds provided by the CARES Act for emergency lending programs run by the Federal Reserve.
Notably, businesses that received PPP loans will be allowed to deduct the costs covered by those loans on their federal tax returns, so long as they have been forgiven. The IRS had previously said that expenses paid with PPP funds were not deductible – directly counter to Congress’s intent. KJK’s Managing Partner Jon Pinney and Chair of the Tax Practice Kevin O’Connor led the charge advocating on behalf of Ohio’s small businesses on this issue, and we are pleased to see Congress is taking action.
The bill does not, however, include new money for state and local governments, nor does it include liability protections for businesses.
In a general summary, the relief package addresses the following:
- The bill includes more than $284 billion for first and second forgivable Paycheck Protection Program (PPP) loans, expanded PPP eligibility for nonprofit organizations and news outlets, and modifications to the program to serve small businesses, nonprofits and independent restaurants.
- The language ensures that churches and faith-based organizations are eligible for PPP loans.
- Businesses that received PPP loans and had them forgiven will be allowed to deduct the costs covered by those loans on their federal tax returns.
- The package provides $15 billion for independent movie theaters and cultural institutions.
- The deal includes $20 billion for targeted grants through the Economic Injury Disaster Loans (EIDL) program.
- The package also includes a tax break for corporate meal expenses.
- Additionally, the package includes funds for the very small businesses and provides for lending by community lenders.
Continued Rental Assistance & Eviction Moratoriums
- The eviction moratorium, which was due to expire at year end, will be extended until Jan. 31, 2021.
- The bill includes $25 billion in emergency assistance to renters.
- There is thought that the moratorium could be extended by the Biden administration, and it remains relatively unclear how the rental assistance will be distributed.
- The legislation includes $600 stimulus checks per person, including adults and children. That means a family of four would receive $2,400, up to a certain income threshold.
- The size of the payment decreases for people who earned more than $75,000 ($150,000 married) in the 2019 tax year. The check completely disappears for individuals who earn more than $99,000 ($198,000 married)
- The bill extends and expands the Employee Retention Tax Credit through July 1, 2021. It increases the maximum refundable tax credit from $5,000 to $14,000 and may now be used in conjunction with the PPP programs.
- Payroll Tax Credit: Extends the Families First Coronavirus Response Act (FFCRA) paid sick and family leave payroll tax credit to March 31, 2021 from Dec. 31, 2020.
- Codified the President’s Memorandum on Payroll Tax Deferral and extends the repayment from April 31, 2021 to Dec. 31, 2021.
- Congress will extend unemployment benefits of up to $300 per week. The benefit could kick in as early as Dec. 27, 2020 and run at least through March 14, 2021.
- An unemployment benefits program for contract and gig workers, which is set to expire at the end of the year, would be extended, too.
- The original CARES Act provided $600 in enhanced weekly unemployment benefits.
Money for Vaccine Distribution
- The bill includes $20 billion for the purchase of vaccines. It also provides $8 billion for vaccine distribution and includes $20 billion to assist states with testing.
- The agreement provides for $10 billion for child-care assistance.
Transportation & Infrastructure Support
While the bill lacks new direct support to state and local governments as previously provided through the Coronavirus Relief Fund, the bill provides infrastructure funding including:
- Transportation support of $45 billion, including $16 billion for another round of airline employee and contractor payroll support; $14 billion for transit; $10 billion for highways; $2 billion for intercity buses; $2 billion for airports; and $1 billion for Amtrak.
- Creation of a $3.2 billion emergency FCC fund to the support digital connectivity of low income families, in addition to funding to expand broadband to rural areas and continued investment in telehealth opportunities.
Miscellaneous & Other Additions
- The package includes legislation to end surprise billing for emergency and scheduled care; provides a tax credit to support employers offering paid sick leave; and $13 billion in increased food stamps and nutrition benefits.
We are continuing to look through the text of the bill and will provide additional, more in-depth updates. In the meantime, if you have questions or would like to discuss further, please reach out to Scott Norcross (firstname.lastname@example.org; 216.736.7264), Demetrius Robinson (email@example.com; 614.427.5749) or Stephanie Mercado (firstname.lastname@example.org; 216.736.7272).