Congress Approves New Coronavirus Stimulus Package

After months of negotiations, the U.S. House of Representatives and the U.S. Senate voted last night to approve a new stimulus package, as part of a larger $2.3 trillion appropriations bill to fund the Federal Government for fiscal year 2021. The new stimulus package will provide much-needed relief to millions of Americans, whose businesses and personal finances continue to be affected by the Coronavirus (“COVID-19”) pandemic.

Highlights of the $900 billion “Coronavirus Response and Relief Supplemental Appropriations Act” include the following:

• $166 billion for economic impact payments of $600 for each adult and child dependent, the amount of which will be reduced for individuals with an adjusted gross income greater than $75,000 for the 2019 tax year ($150,000 for married couples), similar to the first round of stimulus checks;

• $120 billion for supplemental Federal unemployment payments of $300 per week through mid-March, plus the extension of Pandemic Unemployment Assistance benefits for independent contractors, gig workers, and the self-employed, as well as the extension of Pandemic Emergency Unemployment Compensation for 11 additional weeks, for those who exhausted their regular state benefits;

• $284 billion for a new Paycheck Protection Program (“PPP”) to provide a second-round of loans for qualifying small businesses that have suffered at least a 25% reduction in gross receipts in any quarter of 2020, compared to the same quarter in 2019, as well as loans for first-time borrowers, including qualifying 501(c)(6) organizations and news outlets. The new PPP includes special rules for restaurants and hospitality businesses, along with set-asides for underserved and minority-owned businesses. The legislation also provides for simplified forgiveness for all PPP loans of $150,000 or less, and clarifies that current and future borrowers will be allowed to deduct expenses paid with forgiven PPP loans for Federal income tax purposes, despite prior IRS guidance;

• $80 billion for new targeted Economic Injury Disaster Loan (“EIDL”) grants for businesses in low-income communities, as well as continued SBA debt relief payments, and dedicated funding for live-venues, independent movie theaters, and cultural institutions.

• Extension and expansion of the refundable Employee Retention Tax Credit through July 1, 2021. Businesses will now be able to take the tax credit and receive a PPP loan;

• Extension through March 2021 of payroll tax credits to reimburse employers offering paid sick and family leave, as introduced in the Families First Coronavirus Response Act; and

• 100% tax deduction for business meal expenses in 2021 and 2022.

President Trump signed the legislation into law on December 27. The Treasury Department, SBA, and other Federal agencies will now start drafting rules and regulations to implement the new stimulus provisions within the next week to ten days. It is very likely that the new PPP will be ready to launch in early January 2021.

While we do not have all the details or guidelines for the new PPP yet, we do anticipate the new funding will be exhausted relatively quickly; so, it is critical that you begin preparing for the application process as soon as possible. Individuals and small business owners considering applying for a second PPP loan should review and evaluate the qualification requirements, specifically those related to gross receipt reductions in 2020 compared to the prior year.

PPP 2.0 & Stimulus Webinar

Wednesday | December 30, 2020 from 10:00-11:00am

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For additional information on the new stimulus package, as well as other Federal, state and local relief measures, please visit our COVID-19 Resource Center on our website. If you have any questions, please contact your Tronconi Segarra & Associates advisor or a member of our response team at covid19team@tsacpa.com