We’ve all experienced it – the let-down, when we feel when our expectations aren’t met. When a highly-recommended film, or book, or restaurant disappoints us.

But what are our – possibly unrealistic – expectations actually doing for us? Are they perhaps closing us off to new experiences we might enjoy if we went into them without high expectations, just to find out what they actually are, what they might have to offer us? Are we perhaps suffering, some of the time, from the “I like what I know” syndrome?

That’s a comfort thing, and I’m all for comfort – up to a point. But I wonder where that point tips over into complacency and stagnation – I don’t think any of us likes the idea of stagnating in place.

If our idea of a good restaurant, deep down, is where can we get an excellent burger, and nothing beyond that, we won’t want to try fine dining, not American, French, Italian, Chinese, Thai, etc. Perhaps we line up regularly at Port of Call. But what if we do open ourselves up to the new? Jettison our expectations, and discover what unfamiliar food actually tastes like?

Maybe we won’t like it. Maybe we’ll love it. But we won’t know for certain if we don’t allow ourselves to experience it, freed of our regular habits and false expectations.

If we read a glowing review of a play, a film, a restaurant, a wine, maybe we shouldn’t take that to have universal application. Our tastes may be very different from the reviewer’s, and assuming the reviewer is “right” can lead us into high expectations which may let us in for disappointment. Taste is only taste, it’s neither “right” nor “wrong,” it just is, and we are each entitled to cater to our own.

On the other hand, some of my greatest pleasures have come from visiting a restaurant, hearing a band, reading a book which was entirely unheralded. When I had no expectations at all, having nothing to base them on, and thoroughly enjoyed myself. Happy surprises bring their own particular brand of pleasure.

Not that we should have anything against the tried and true, either. I know people who re-read favorite books regularly, and I myself have been known to revisit a film or two I’ve loved. There are certainly favorite restaurants and vacation destinations I frequent.

Still, as someone who has had many transformative experiences when I wasn’t looking for them, I do think we do well to allow ourselves to be open – to let, as the legal maxim has it, res ipsa loquitur – the thing speak for itself.

Perhaps it’s a question of balance – like the old song goes, “make new friends, but keep the old.” I think that balance – the equilibrium between expectation and the comfort we feel when our expectations are met, and keeping our minds open to the new – is something each of us may have to work out for ourselves.

How do you achieve that balance? Please click here to email me directly – I’d love to hear your strategies and stories.

Until next Wednesday –

Peace,

Eric

This week, the U.S. House of Representatives will finalize details on their version of President Biden’s proposed $1.9 trillion coronavirus relief and stimulus spending package, and could potentially send the bill to the Senate as early as next week.

Unsurprisingly, most of the President’s proposed measures – though not quite all – appear to be included, based upon the various committee approvals.

Highlights

  • Stimulus checks – direct payments of up to $1,400 per individual. Full credit for children as well as adult dependents (who were not eligible for previous stimulus checks). The amount of the checks will decline for those individuals earning over $75,000 and married couples with income above $150,000, phasing out completely at earnings of $100,000 per individual and $200,000 for families.
  • Federal unemployment assistance – both the Pandemic Unemployment Assistance (which provides relief for freelancers, independent contractors and gig-economy workers) and the Pandemic Emergency Unemployment Compensation (for more traditional workers) programs will be extended through August 29, 2021 (both are currently set to expire in March). The Federal supplemental payment of $300 per week will be increased to $400.
  • Enhanced Child Tax Credit – a one-year increase, beginning in July of 2021, of the credit from its current $2,000 for children under the age of 18 to $3,000, and to $3,600 for children under 6. For the term of this increase, the credit will be fully refundable, meaning that families with incomes too low to receive the full credit under current provisions will now be eligible for the full benefit. In addition, the credit will be provided monthly, rather than on an annual basis as is currently the case.
  • Education – $130 billion for K-2 schools to upgrade ventilation, reduce the number of students per class for social distancing purposes, purchase personal protective equipment, and hire additional staff, as well as to prevent teachers being laid off. A minimum of 20% of these funds are to be used to mitigate the loss of learning students are currently suffering, through extended school days, summer school, or other provisions. For higher learning institutions, $40 billion is provided, and $39 billion is earmarked for providers of child care.
  • State and local governmental assistance – $350 billion to state, local, tribal and territorial governments.
  • COVID-19 vaccines and testing – $46 billion for testing, contact tracing and mitigation, $25 billion to address health disparities and protect vulnerable segments of the population, $14 billion toward vaccines, and $7.6 billion for hiring an additional 100,000 public health workers (this will almost triple the current number of such workers).
  • $15 per hour Federal minimum wage – to be phased in by 2025. This hourly wage will extend to those currently not covered by the Federal minimum wage provisions, such as those who are tipped, underage, or with certain disabilities.

The last provision listed is the most controversial at present, with two Senate Democrats, Krysten Sinema of Arizona and Joe Manchin of West Virginia already vocal in opposition. This is, of course, significant, as Democrats cannot afford to lose a single Senate vote, given the 50/50 split between the Democrat and Republican senators.

Notably absent is any further provision to help mitigate small businesses’ losses.

The coming debate should be interesting – stay tuned!

If you have questions on the proposed legislation or, indeed, any subject, please click here to email us directly.

Until next Wednesday –

Peace,

Eric

As I’ve noted, my career path to helping people has entailed a significant amount of self-discovery, which, in turn, has made me sensitive and understanding to people’s individuality – to what drives them, what they need and want out of life.

In short, through writing my own story (metaphorically speaking), I learned the importance of each person’s own story. And that is what I need.

To understand your story. It’s not anyone else’s story – you own it, you’ve lived it, it’s yours. And it is what drives you.

One of the first things I like to ask new and prospective clients is, “Why is money important to you?” Quite often, the first thing out of their mouths is a generic tribute to the fact that money is important, period.

Of course it is! But that’s not what I want to know. What I want – and need – to know, in order to help you to the very best of my ability, is why it’s important to you. What does it represent, in your most secret heart?

Does it mean security or adventure? Do your retirement dreams whisper quiet comfort, or the freedom to take on new challenges? Neither one is better than the other – they are both worthy of address – as are all the goals, dreams, and fears my clients share with me.

Did you grow up in hard or easy circumstances? A good number of my clients have encountered hardships at some point in their lives, and this can impact the way you approach life – and money.

Everything you’ve lived through is your story. It is the movie that you star in and direct. Everything you’ve made, from your family to your business to your retirement wealth, is part of your story. I can’t help you plan for the future you long for unless I have a deep understanding of what makes you you, and not someone else.

What I want is to help you plan for the future based upon where you have been, where you are now and where you want to go.

And to do that, I have to know that it all matters.

In my office, you are listened to, you are heard – and you are cared about.

Because you are telling me your story, and your story is worth listening to.

Please click here to email me directly – I’d love to talk with you and hear your own, unique story.

Until next Wednesday –

Peace,

Eric

Last week, lenders nationwide were permitted to begin accepting applications for second-round Paycheck Protection Program Loans (PPP 2 Loans), as authorized by the Consolidated Appropriations Act (CAA).

There is some $284 billion available in funds for these loans, but remember, the initial $349 billion authorized in 2020 ran out within about two weeks – so don’t hesitate to determine whether you are eligible and, if you are, get your calculations and documentation in order without delay.

PPP Round 2 Loans are capped at $2 million.

Eligibility

Eligibility for a PPP Round 2 Loan requires that:

  • You took a PPP Round 1 Loan, the proceeds of which have already been, or soon will be, exhausted,
  • You have 300 or fewer employees, and
  • You experienced a 25% or greater decline in revenue in 2020 versus 2019, either for any given calendar quarter (you cannot use any three-consecutive-month period you choose) or for the year as a whole.

Note that, if you are simply running a total of your 2020 bank deposits to determine revenue (some cash-basis businesses may be tempted to do this), you must be vigilant in excluding any PPP Round 1 Loan proceeds – it is neither appropriate nor in your interest to include them.

We recommend that you go ahead and run your profit and loss statements, having ensured that PPP Round 1 Loan proceeds are entered into a different account than your ordinary revenue, and use those figures to determine your eligibility for a PPP Round 2 Loan.

Documentation & Calculations

If you are seeking a PPP Round 2 Loan of $150,000 or less, and applying to the same lender you used for your PPP Round 1 Loan, your lender may not require documentation supporting your 2019 or 2020 quarterly revenue figures, but you need to keep them on hand in case they are asked for.

Likewise, for such a loan ($150,000 or less and with the same lender from whom you received the PPP Round 1 Loan), 2019 payroll documentation may not be required to apply for a PPP Round 2 Loan.

But for those seeking larger loans, or applying through a new lender, you may be required to provide:

  • Quarterly revenue for 2020 versus 2019 (profit and loss statements) showing a decline of 25% or greater for at least one quarter of 2020 compared with 2019.
  • Documentation of payroll expenses. The CAA allows you to use either 2019 or 2020 payroll data to determine the amount of the loan you can apply for, so use the year with the higher payroll costs, which gives you a higher loan figure.


Other Potentially Required Documents

Other documentation you may need to provide:

  • Photo ID for owners who own 20% or more of the business.
  • Profit and loss statements for 2020 and 2019.
  • 2019 business tax returns (2020 if available). For partnerships, this means both IRS Form 1065 and Schedule K-1s, for sole proprietors IRS Form 1040 Schedule C.
  • Your Articles of Incorporation.
  • Payroll reports listing gross wages, paid time off, and taxes for all employees for all months of 2020.
  • Form 941 (Employer’s Quarterly Federal Tax Return).
  • Form 944 (Employer’s Annual Federal Tax Return).
  • Form 940 (Employer’s Annual Federal Unemployment Return).
  • Form W-3 (Transmittal of Wage and Tax Statements).
  • Documentation supporting employer-paid benefits such as health insurance and retirement plan contributions.


While we consider it unlikely that the rules governing PPP Round 2 Loans will change as significantly or as frequently as those governing PPP Round 1 Loans did, we feel some changes are more than likely. You never know.

We will monitor the program, and, of course, report back to you.

Stay tuned!

If you have questions on whether a PPP Round 2 Loan is both available to and beneficial for your business, please click here to email me directly.

Until next Wednesday –

Peace,

Eric

It’s tempting to be busy. “Busy” signals that we’re working. But are those “busy” signals reality? And, even if they are, is merely busying ourselves actually meeting our clients’ needs to the very best of our ability?

I think that, often, we need to step back and ask ourselves whether our “busy” work is producing the solutions our clients want and need, or are we merely doing what’s easiest to do? One of the best ways to determine this is to ask ourselves the hard questions. But it’s also a very good idea to check in frequently with our clients, to ensure we are actually being productive for them, and not merely busy.

If our workplace is a factory line, measuring productivity is an easy matter, and, up to a point, keeping busy will raise our productivity while in the factory. For knowledge-brokers, though, the metrics are much more complicated. We measure productivity via our clients’ satisfaction, our own valuation of the services and solutions we provide, as well as our bottom line.

But we all, factory workers and knowledge-brokers alike, require rest. We all know muscle fatigue, what it feels like, and how, sometimes, without rest our bodies just won’t do what we want of them. The same is true for the brain. A factory worker’s hands need rest, and a knowledge-worker’s brain needs rest, or they won’t be able to reach that deep level of focus which produces their best work.

And right now, I think many of us are experiencing a kind of mental fatigue, after a year of COVID-19 and the crushing Saints’ loss on Sunday, sadly ending their season.

I’ve written extensively on the need for recreative time, vacations, holidays, getaways. But it’s been a while since I’ve written on the perils of fatigue – and they are real. Fatigue impairs memory, concentration, and decision making (bad for knowledge workers!), as well as coordination, reaction time, and muscle strength (bad for physical workers!).

Therefore, in order to continuously produce our best work, we have to avoid the trap of being busy instead of being productive. We have to rest our minds, so they can rejuvenate and refresh themselves. This is not accomplished by reading thick technical tomes, but a well-written yet undemanding novel can fill the bill, for readers. We can take a nap, exercise. Anything which allows our brains to take some time off and kick back.

This isn’t a matter of stress-relief, as important as that is. Resting our minds, daily, is stress-prevention, in addition to promoting our best and deepest work. Sounds like a good combination to me.

How do you like best to rest your brain? What activities (or non-activities) bring you the greatest focus and calmness during the workday?

Please click here to email me directly – I’d love to hear your stories and strategies.

Until next Wednesday –

Peace,

Eric

When I started my accounting career, I had a serious desire to help others. I went to work for one of the then Big 6 accounting firms in New Orleans. I footed general ledgers, prepared tax returns, and performed other seemingly menial tasks for somewhere between 14 and 16 hours a day.

I would see companies whose books showed serious financial issues, and I’d ask managers if we couldn’t figure out a way to help these companies. One example was the audit of a tugboat company, which occurred in the middle of an oil field crisis. I asked the supervisor on the job if we couldn’t we help them refinance their boats, get them a little working capital? I was told, “Just go back to your cubicle, finish the accounts receivable portion of the audit.” I was not happy.

After two years, I was asked whether I’d considered taking a job with one of the firm’s clients. “No,” I replied, “I want to be a partner here. Did you see the client I brought in? And the retainer check? They want us to do an inventory study for them.”

“Well, who asked you to do that?” “No-one, I just wanted to help them.” “Go back to your cubicle and foot some general ledgers.”

They weren’t much happier with me than I was with them, and eventually I left, with the intention of setting up shop on my own.

Serendipitously, a friend from college called me; he was with another of the Big 6, and was beyond swamped. I said I’d help him out, maybe three days a week, and found myself with a job I could live on (complete with health insurance and 401(k)) and time to build my own business.

I hustled – I had to. My evenings were spent at Charity Hospital, now sadly gone, recruiting clients among residents who moonlighted. You see, residents could earn extra dollars – $100 was about the usual hourly wage, and back then, that was money – spending their weekends manning emergency rooms in Port Sulphur and other areas outside New Orleans. Taxes weren’t withheld, as these doctors were treated as independent contractors, and often we were talking about extra income amounting to $50,000 to $60,000 a year, for residents making something like $30,000 per year at LSU or Tulane.

I started putting up signs all over the downtown New Orleans medical corridor hospitals, and snagged one doctor. One became two, two became four, four became 16. Some of those doctors are clients to this day, and I cherish them all, thankful they trusted a hustling sole practitioner who was entirely unknown to them.

Finally, it got through to me. I was not only helping entrepreneurs, I was an entrepreneur myself. By nature, by inclination, by temperament. And being an entrepreneur gave – and still gives – me insight and empathy in helping my clients solve their unique problems.

Embracing entrepreneurship meant embracing who I am. While it’s sometimes been scary, I would never trade what I’ve learned, the experiences I’ve had, the clients I’ve been able to help, the people I’ve worked with, for a past, present and future of nothing but grinding out tax returns and general ledgers at a big firm.

What – or who – has helped you find who you are? Was it a lightbulb moment, or a gradual dawning?

Please click here to email me directly – I’d love to hear your stories.

Until next Wednesday –

Peace,

Eric

Last week, we discussed some of the changes to COVID-19 relief under the newly enacted ~$900 billion legislation. This week, we take a deeper dive into the specifics of the changes to the Employee Retention Credit (ERC) as modified via Internal Revenue Code Sections 206 and 207 of the new law.

As initially instituted in the CARES Act in March of 2020, the ERC was a mutually exclusive alternative to a Paycheck Protection Program (PPP) loan – if a business applied for a PPP loan, it could not also apply for an ERC, and vice versa.

Section 206 of the new law specifically rescinds that mutual exclusivity, enabling a business to take out a PPP loan and remain eligible for an ERC, so long as the same eligible payroll-related costs are not used to calculate eligibility for both the PPP loan and the ERC. This is true retroactively for 2020, as well as for the first two quarters of 2021.

However, the rules governing the ERC vary significantly from 2020 to 2021 – for 2020, the major change under the new law is the eligibility of PPP borrowers to apply for an ERC under Section 206.

2020: A business was/is eligible for an ERC for 2020 if, for any quarter, 1) that business was shut down or partially suspended by governmental regulation or edict, or 2) the business experienced a drop in revenue of 50% or more versus the same quarter in 2019. Once eligible, the business remained ERC-eligible until the end of any 2020 quarter in which revenues returned to 80% or more of the revenues from the same quarter in 2019.

2021: Under Section 207(a)(1) of the new law, the ERC is extended through June 30, 2021, from its original end date of December 31, 2020. A business is eligible for a 2021 ERC if, for either the first or second quarter, gross revenues are less than 80% compared with the same quarter in 2019, rather than the same quarter of 2020.

If the business had not begun operations at the start of the comparable 2019 quarter, the corresponding 2020 quarter revenues may be substituted. To determine eligibility for an ERC for the first quarter of 2021, 4th quarter revenues for 2020 versus 2019 may be used.

2020: A business which qualified for an ERC could claim a tax credit equal to 50% of the first $10,000 in eligible compensation (expanded retroactively in the new law to include health-insurance costs paid by an employer) paid to any employee during the year, providing the business had 100 or fewer full-time equivalent (FTE) employees. For such companies, every fully-eligible employee with over $10,000 in annual wages would enable the business to claim a tax credit up to $5,000.

If, however, a business had over 100 FTE employees, only those employees who were paid but not actually working were eligible to be claimed in an ERC.

For example, a business owned a chain of restaurants offering sit-down dining and had over 100 FTE employees in 2019. Due to COVID-19, the company was barred from providing dining on-site and could only provide take-out. The wages of wait staff who were not working but were paid are eligible to claim an ERC against, but the salaries of the working kitchen staff are not.

2021: Under Section 207(b) of the new law, an eligible business can claim a 2021 ERC equal to 70% (up from 50% in 2020) of the first $10,000 of qualified wages paid to any employee per quarter, rather than on an annual basis. This means that for a business showing gross revenue drops of 20% or more for both the first and second quarters of 2021 as compared with 2019, an employee whose wages generated an ERC eligibility of $5,000 in total for 2020 could potentially generate eligibility for $14,000 in ERC for 2021.

Section 207(e) increases the number of employees a business may have before the change in eligible FTE employees (i.e., only those paid not to provide services) kicks in from 100 to 500, meaning that the hypothetical restaurant chain postulated above would, providing it has fewer than 500 employees in total, be able to claim an ERC for their working kitchen staff as well as paid but non-working wait staff.

2020: Eligible wages per qualified employee were capped by Section 2301(c)(3)(b) at what the employee’s wages would have been during the 30-day period prior to the eligible quarter. Simply put, this was instituted to preclude an employer from paying higher wages temporarily, or bonuses, to gain a greater ERC.

2021: Section 207(e)(2) strikes Section 2301(c)(3)(b) entirely, meaning that employers can pay bonuses or increase wages and remain eligible for ERC based on those increased figures.

Further, Section 207(g) provides, for 2021, that a business eligible for an ERC for a given quarter can receive the ERC in advance, rather than claiming the credit by reducing payroll tax deposits. The credit claimed can be up to 70% of the average wages paid for the same quarter in 2019.

We will monitor the guidance which will be forthcoming from the IRS, and, of course, report back.

Stay tuned!

If you have questions on the new rules governing the ERC and how it might impact your business, please click here to email me directly.

Until next Wednesday –

Peace,

Eric

On Sunday, December 27, 2020, President Trump signed into law the COVID-19 relief package of ~$900 billion, as well as the accompanying ~$1.4 trillion omnibus appropriations bill for fiscal 2021 (October 1, 2020, through September 30, 2021).

On Monday, December 28, 2020, the U.S. House of Representatives approved by a vote of 274 to 134 a separate measure increasing direct stimulus payments ($600 per taxpayer and dependent child under the newly signed legislation) to $2,000 for both taxpayers and dependent children.

On Tuesday, December 29, 2020, the House bill for increased stimulus payments reached the Senate, but was blocked from a vote by Senate Majority Leader Mitch McConnell. Late Tuesday, Senator McConnell surprisingly introduced his own bill increasing stimulus payments to $2,000, but also providing for full repeal of Section 230 of the Communications Decency Act, which makes changes to online-speech rules, and the creation of a new commission to study election fraud.

The direct stimulus payments would start phasing out when individual adjusted gross income exceeds $75,000, when head-of-household income exceeds $112,500, and when income for married couples filing jointly exceeds $150,000. For individuals without children, the payments go to zero when income reaches $87,000; that is $174,000 for married couples. The numbers are generally based on 2019 income.

As for the enacted COVID-19 relief bills, we have discussed many of the more significant provisions heretofore. However, we thought it might be of interest to note that under the newly enacted COVID-19 relief law there are changes regarding the interaction of Paycheck Protection Program (PPP) loans with the Employee Retention Credit (ERC), and to the latter program particularly:

  • For PPP Round II loans, $284 billion has been allocated. Loan amounts will be limited to $2 million, and to businesses with 300 or fewer employees (down from 500 in the first round of loans) who demonstrate a drop in income of 25% or greater for any quarter of 2020 as compared with the same quarter in 2019. The loan amount which can be applied for is based on 2.5x average monthly payroll, calculated based on either the 2019 average or the average for the 12 months prior to applying for the loan.
  • For restaurants, hotels (and other businesses with NAICS codes starting with 72), you may apply for a loan in the amount of 3.5x average monthly payroll, other provisions as above.
  • Eligible payroll costs (wages, employer taxes, employer-paid health insurance and retirement contributions, etc.) must still represent 60% of costs eligible for forgiveness, with 40% allowable for non-payroll-related eligible costs (e.g., rent, mortgage interest, utilities including internet, and other newly eligible expenses under the just-passed relief bill, such as essential supplier costs).
  • Additionally, a new, streamlined PPP Loan Forgiveness application and process will be implemented for loans of $150,000 or less.
  • If you took an Employee Retention Credit (ERC) and not a PPP loan during Round I in 2020, and feel this was possibly a mistake, then you can pay back the ERC you received and take out a PPP Round I loan, as soon as the application process for Round II PPP loans opens.
  • However, under the new rules, you may be eligible to recapture an ERC for wages paid as far back as March 12, 2020, if you did not use them as a qualifying cost basis for a PPP loan.
  • An example of how this might work: you received a PPP loan in the amount of $100,000. You had a 24-week period in which to incur eligible forgivable expenses, 60% of which must be payroll-related costs. You paid $200,000 in eligible payroll-related costs during the 24-week period, and had non-payroll-related eligible forgivable expenses of $40,000.
  • You need, therefore, only use $60,000 of those $200,000 in payroll-related costs to obtain forgiveness of your $100,000 PPP loan. You are now potentially eligible for an ERC based upon the $140,000 in remaining payroll-related costs.
  • Under 2020 ERC rules, to be eligible for the credit you must meet one of two criteria – either 1) your business was shut down by governmental mandate, or 2) your business experienced a 50% or greater decline in revenue quarter-over-quarter, by comparing the 2020 quarter with the same quarter in 2019. If you meet either test, you can receive an IRS tax credit of 50% of the wages paid to an individual employee, up to the first $10,000 in wages paid during the year ($5,000 maximum credit per employee – i.e., if you have a team of 10 people and all fully qualify, you may be eligible for an ERC of $50,000 on your 2020 federal income taxes).
  • It is noteworthy that, once you are eligible for an ERC, you remain eligible until the quarter in which your revenues return to at least 80% of revenue compared with the same quarter of 2019.
  • Now, for 2021, the ERC gets even more interesting. For the coming year, businesses will only need to demonstrate a 20% drop in revenue compared with the same quarter in the prior year. And, if your revenues for the fourth quarter of 2020 were at least 20% down from the fourth quarter of 2019, you are automatically eligible for an ERC for the first quarter of 2021.
  • In addition, the 2021 ERC provides a significant increase in the credit maximum – your credit will be 70% of the first $10,000 (up from 50%) paid in wages per employee per quarter rather than per year, through the ending of the credit, which has been extended in the new legislation from December 31, 2020 to June 30, 2021.
  • This means that you could potentially receive an ERC of $14,000 per eligible employee for the year 2021, up from $5,000 per employee for 2020.
  • Both the SBA and the IRS will need to weigh in with guidance on how this will work going forward; however, this will be of potentially significant benefit to business owners (and their employees).

We are glad President Trump signed the COVID-19 relief bill on December 27, 2020, and we are sure many, many individuals and families will have a happier New Year for it. It will be interesting to see how the issue of the increased (or not) stimulus checks is resolved.

We will monitor the progress of the competing increased direct payment measures, as well as SBA and IRS guidance. The SBA has 10 days from the date the bill was signed into law to provide guidance as to the process and procedures pertaining to the PPP Round II loans.

Stay tuned!

If you have questions on the latest stimulus package and how it might impact you and/or your business, please click here to email me directly.

Until next Wednesday – Happy New Year!

Peace,

Eric

Late Monday, December 21, 2020, the U.S. Senate and House of Representatives passed a ~$900 billion COVID-19 relief bill, the details of which had been haggled over for weeks.

While President Donald Trump had been pushing for passage, and was expected to sign the bill in short order, he has thrown the nation a curveball, sending the $900 billion COVID-19 relief package back to Congress for amendment under threat of veto Tuesday night, December 22.

The President said the bill he received bore little resemblance to what he had expected, noting numerous provisions and disbursements which he says had little or nothing to do with COVID-19 relief (legislators being legislators, they of course added pork at the last minute). He also asked that Congress increase the direct stimulus payments ($600 per taxpayer and $600 each for dependent children under 17 in the current bill) to $2,000 per taxpayer before he would sign this bill into law.

Nancy Pelosi, Speaker of the House, responded that she would try to push through a bill with unanimous consent to cover the President’s desire for the higher-dollar stimulus checks on Thursday, December 24, Christmas Eve. It is also possible that Congress could override a Presidential veto with a “yea” vote of two-thirds of each Chamber.

As for the rest of the COVID-19 relief bill (as it stands now), we have discussed most of the more significant provisions heretofore. Below are some of the highlights:

  • Direct stimulus checks to taxpayers of $600 each, and $600 each for dependent children under the age of 17, which phase out for single taxpayers with income of $75,000 or greater, and married couples with income of $150,000 or greater.
  • Federal unemployment supplemental benefit of $300 per week through March 14, 2021.
  • Funding for a second round of Paycheck Protection Program (PPP) loans of up to $2 million for businesses with 300 or fewer employees (down from 500 in the first round of loans) who demonstrate a drop in income of 25% or greater for any quarter of 2020 as compared with the same quarter in 2019. Also qualifying for new PPP loans are 501(c)(6) organizations with 150 or fewer employees which do not engage in lobbying.
  • Clarification that eligible covered expenses paid for with proceeds from first PPP loans are fully tax-deductible. The definition of ‘eligible covered expenses’ has been expanded to include expenses such as costs for compliance with safety regulations in order to maintain operations, essential supplier costs, and damage from vandalism which was unreimbursed via insurance. However, payroll-related costs must still represent 60% of all forgivable eligible covered expenses, with all other expenses limited to 40%. Borrowers must be careful to ensure that they have adequate tax basis for 2020 to deduct any losses, due to the fact that most PPP loans will be forgiven in 2021, and that is the year in which taxpayers’ basis would be increased for the tax-exempt forgiveness of the PPP loan.
  • Economic Injury Disaster Loan (EIDL) advances will no longer be deducted from the forgiveness amount of any PPP loan, nor are such advances to be considered taxable income.
  • PPP borrowers whose PPP Version 1.0 loans were in amounts of $150,000 or less will see a new, streamlined forgiveness one-page application and process.
  • $15 billion in direct grants by the Small Business Administration (SBA) to shuttered venues (e.g., movie and live theatres and other performing arts venues, museums, and talent representatives) which can demonstrate a reduction in revenues of 25% quarter-over-quarter, and which were fully operational as of February 29, 2020.
  • Business meals will be fully tax deductible in 2021 and 2022.


We were ready to applaud Congress for finally getting this bill passed, imperfect though it may be, and giving the nation a gift for the holidays; however, it remains to be seen whether COVID-19 Version 2.0 relief will ultimately be signed by President Donald Trump or will have to wait for President-elect Joe Biden’s pen.

Stay tuned – we will be watching, and reporting back to you!

If you have questions on the latest stimulus package and how it might – depending on the final bill’s provisions – impact you, your family, or your business, please click here to email me directly.

Until next Wednesday – Happy Holidays!

Peace,

Eric

2021

2020

2019

2018

2017