The Senate and House have reached an agreement on a 5,593 page, $908 billion pandemic economic stimulus package. Also included in the agreement is a $1.4 trillion budget to fund the federal government through September 2021, and several tax extenders scheduled to expire at the end of 2020.
Provisions of the relief package include:
• A second round of Paycheck Protection Program (PPP) forgivable loans for qualified businesses, limited to small businesses with 300 or fewer employees that have sustained a 25% percent revenue loss in any quarter of 2020.
• DEDUCTIBILITY for PPP expenses paid for with forgiven funds.
• Simplified loan forgiveness procedures for borrowers with PPP loans of 150K or less
• 501(c)(6) eligibility for PPP funds.
• EIDL Advance does not reduce PPP forgiveness
(The SBA has 10 days from signing to provide additional guidance. We’ll keep an eye out for this guidance and share it when it’s released.)
• Direct payments of $600 to individuals, following the same payment limits in the earlier relief bill.
• Charitable deduction: The legislation would extend for one year (through 2021) the $300 above-the-line-deduction, which was established in the CARES Act and set to expire the end of 2020. It also would increase the amount for 2021 that married couples filing jointly can deduct for charitable contributions, from $300 to $600. Additionally, the bill would extend through the end of 2021 the increased limits on deductible charitable contributions for individuals who itemize.
• Restart of $300 per week additional unemployment benefit, lasting until March 15, 2021.
• Temporary allowance of full deduction for business meals: The bill temporarily allows a 100% business expense deduction for meals (rather than the current 50%) as long as the expense is for food or beverages provided by a restaurant. This provision is effective for expenses incurred after Dec. 31, 2020, and expires at the end of 2022.
• Credits for paid sick and family leave extended through March 31, 2021
The tax provisions in the relief bill, including the tax extenders, may require a conformity bill in Minnesota to provide the same tax relief passed by Congress.
If you have any questions about how this bill will affect you or your clients, please reach out to your SDK contact, or Laurie Waterman, our in-house PPP researcher.