Bipartisan Emergency COVID Relief Act of 2020
The “Gang of Eight”, a bipartisan group of eight U.S. Senators, were able to build a framework for emergency relief. Their efforts combined with a lot of pressure to get this passed before sessions closed for the upcoming holidays pushed Congress to come to an agreement and get this bill passed to prevent a government shutdown. Below are some of the highlights of the relief act:
Economic stimulus Payments up to $600 per adult with an additional $600 for each child under 17. Income phase outs begin at adjusted gross incomes over $75,000 for individuals and $150,000 for married filing joint filers.
Educator expense deductions now include personal protection equipment up to $250 of unreimbursed expenses.
Enhanced Unemployment Benefits of $300 per week are extended 11 more weeks to March 14, 2021.
Credit Extensions for paid sick and family leave to March 31, 2021.
Payroll tax deferrals are also extended to April 30, 2021 with repayment to January 1, 2022.
And Another Round of Paycheck Protection Program (PPP) Funding
What is expected to remain the same about the PPP Funding?
The formula for calculating the loan is expected to remain the same with loan amounts equal to 2.5 times approved payroll costs subject to the same compensation limitations for employees and owners making greater than $100,000.
Covered uses eligible for forgiveness still include the same payroll costs, utilities, mortgage interest, rent and utilities.
The ratio is still at least 60% payroll costs and not more than 40% non-payroll costs.
What is changed with the new legislation?
The definition of small business changes from businesses of fewer than 500 employees to businesses of fewer than 300.
Addition of a reduction of revenue requirement is added to the necessity requirement. To qualify, the entity must sustain a 25% loss of revenue in any quarter over the same quarter in 2019.
Simplified Loan Approval expanded from loans of $50,000 or less to loans of $150,000 or less. With this simplified process comes defined retention policies.
- Payroll Records must be retained for 4 years after submission.
- Support for non-payroll costs must be retained for 3 years after submission.
Addition of additional approved uses eligible in the calculation of loan forgiveness. Expenses for personal protection equipment, facilities modifications, covered supplier costs, covered operations costs, and covered property damages are added to the non-payroll expenses eligible in the forgiveness calculation subject to the 40% limitation.
Maximum amount of loan for round two is decreased from $10 million to $2 million.
Eligibility expanded to 501(c)(6) organizations with less than 150 employees such as chambers of commerce and economic development councils.
Clarification of the tax treatment of expenses related to forgiveness of covered paycheck protection program loans, EDIL loans, and certain loan subsidies is included to state that no deduction shall be denied for covered expenses and the forgiveness shall be treated consist with the treatment of tax-exempt income.
