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!