On Monday night, December 21, 2020, the U.S. Senate and House of Representatives overwhelmingly passed the 2021 Consolidated Appropriations Act (the “Act”) which provides $900 billion for COVID-19 relief. President Trump is expected to sign the bill.
Here are some of the highlights of the Act:
- Payments of $600 for individuals making up to $75,000 per year, and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent.
- Enhancement of unemployment insurance benefits. The Act provides an additional $300 per week under the Federal Pandemic Unemployment Compensation (FPUC) program to supplement all state and federal unemployment benefits, starting after December 26, 2020 and ending March 14, 2021. There is also an extension of the Pandemic Unemployment Assistance (PUA) program, which provides continued unemployment assistance to the self-employed, freelancers, gig workers, part-time workers and other individuals in non-traditional employment. The number of weeks of PUA benefits an individual may claim are increased from 39 to 50.
- The Act provides $25 billion in rental relief, which can be used for future rent and utility payments as well as for any back rent owed or utility bills that have not been paid since the beginning of the pandemic. It also extends the nationwide eviction moratorium through January 31, 2021.
- The Act provides $284 billion for the Paycheck Protection Program (PPP), and extends PPP through March 31, 2021. A second round of PPP loans will be available to first-time qualified borrowers, and, for the first time, to businesses that previously received a PPP loan. Specifically, previous PPP recipients may now apply for another loan of up to $2 million, provided they (i) have 300 or fewer employees, (ii) have used or will use the full amount of their first PPP loan, and (iii) can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
- The Act specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes previous IRS guidance that such expenses could not be deducted. While the CARES Act excluded PPP loan forgiveness from gross income, it did not specifically address whether the expenses used to achieve that loan forgiveness would continue to be deductible, even though they would otherwise be deductible. This new “clarification” allowing deductions applies to loans under both the original PPP and subsequent PPP loans.
Our office will continue to follow ongoing developments relating to the implementation of this new law.
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