Late Monday evening, Congress overwhelmingly approved another massive $900 billion COVID relief package for individuals and businesses. Major points of the relief package, which by the way passed the Senate by a vote of 92-6 and also the House by a vote of 359-53, include $600 payments to individual taxpayers that have adjusted gross income (AGI) of $75,000 or less (or $112,500 AGI for heads of households), payments of $1,200 to joint filers with AGI of $150,000 or less, and an additional $600 payment for each qualifying child.
Now for businesses, extra time is provided for paying previously deferred payroll taxes, Paycheck Protection Program (PPP) loans version 2 is available, and borrowers with PPP loans would now be allowed to take deductions for expenses paid with PPP loan proceeds. PPP loans will continue to be at the rate of 2.5 times your monthly except for those in industries that Congress deemed more vulnerable during the pandemic. PPP loans will amount to 3.5 times the monthly payroll for businesses in industries such as the hospitality sector.
The legislation also includes extensions for numerous expiring tax provisions for both individuals and businesses. More information will be to come as the 5,600 page bill gets signed into law.
What Do We Do Now
Speak with your CFO/CPA/Advisor on next steps that your business should take to prepare for the application as well as long term effects. We are still awaiting official signing into law, however let’s be proactive and begin planning with the consideration of what financial institution to approach in the lending process.
Links to Legislative Source Text
The relief package’s tax provisions and the PPP extension appear in three separate bills that were part of the 5,500 page Consolidated Appropriations Act, 2021 as follows:
(2) The Paycheck Protection Program extension is in the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.
(3) Tax extenders and various other tax provisions are in the Taxpayer Certainty and Disaster Tax Relief Act of 2020.