As part of the Consolidated Appropriations Act, 2021, Congress yesterday passed a $900 billion stimulus package that includes several important provisions designed to aid small businesses, extend unemployment benefits, support the distribution of the COVID-19 vaccine and support a host of other areas of need. The legislation now heads to the President for signature. For purposes of this alert, we are focusing on some of the provisions designed to specifically assist employers and small businesses.
Emergency Assistance for American Workers and Small Businesses
As a part of the Emergency Assistance for American Workers and Small Businesses, the stimulus package provides $300 billion to the Small Business Administration (SBA) for the Paycheck Protection Program (PPP) and other small business support.
- Existing PPP loan recipients: Business expenses paid for with the proceeds of PPP loans are considered tax deductible, consistent with Congressional intent in the CARES Act and officially reversing an IRS decision made earlier in the year. In addition, the forgiveness process is simplified for borrowers with loans of $150,000 or less.
- New PPP funding: $284 billion is being designated for a new round of PPP loans.
- Eligibility is limited to businesses with 300 or fewer employees that have sustained a 25 percent revenue loss in any quarter of 2020 compared to the same quarter in 2019.
- Loans are limited to $2 million per eligible borrower, based on 2.5 times average monthly payroll in the prior year or 3.5 times for hospitality businesses.
- Forgivable expenses are expanded to include supplier costs and investments in facility modifications and personal protective equipment to operate safely.
- The additional funding is designated to allow the hardest-hit small businesses to receive a second forgivable PPP loan. There are separate rules for first-time borrowers.
- It includes expanded eligibility for 501(c)(6) nonprofits, such as local chambers of commerce, which were left out of the original program.
- EIDL grants: $20 billion is provided for Economic Injury Disaster Loan (EIDL) grants for smaller businesses.
- Live venues: $15 billion is designated for live event venues, movie theaters and museums that have experienced significant revenue loss.
- Business tax provisions: The legislation improves the tax deductibility of business meals for two years and also extends and enhances the employee retention tax credit. This payroll tax credit is intended to encourage businesses to retain employees.
Mandated FFCRA leave expiration, employer tax credits extension
Provisions for COVID-related emergency paid sick leave and expanded Family and Medical Leave Act (FMLA), originally provided by the Families First Coronavirus Response Act (FFCRA), expire on Dec. 31, 2020. However, the Act extends employer tax credits if businesses choose to offer paid leave based on the FFCRA framework. It is not clear if employees who previously used the maximum paid leave under FFCRA are newly eligible. Employees that do not have available paid leave benefits may be eligible for the expanded unemployment benefits offered in the Emergency Coronavirus Relief Act.
Summary and more information
The above is only a summary review of the Emergency Coronavirus Relief Act. Other provisions in the bill include funding for unemployment assistance, vaccine development and distribution, testing and tracing, support for health care providers and transportation funding, to name a few.
Please get in touch with your primary AGH contact or one of our professionals using the contact information included below to discuss your situation or employer-related questions.
NOTE: Any advice contained in this material is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of avoiding tax penalties that may be imposed by the IRS or states, or promoting, marketing or recommending to another party any transaction or matter addressed herein.
Executive Vice President
Shawn leads the firm’s tax group and serves on AGH’s board of directors. In addition to enhancing business performance to minimize tax consequences, he has extensive experience in mergers and acquisitions, international tax and business structuring. Shawn has public and private experience in the fields of tax and accounting and works frequently with clients in the manufacturing, automotive, wholesale distribution, real estate development and construction industries.
A certified public accountant, Shawn is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants (KSCPA) and chairs the KSCPA Committee on Taxation.
HR & Org. Development Services
Carrie has experience in a variety of human resource functions, including labor laws, compensation structures, employee classification, benefits administration, performance management and human resource best practices. She has served clients in a number of industries, including manufacturing, construction, banking and not-for-profits. Carrie is a member of the national and local chapters of the Society of Human Resource Professionals (SHRM) and serves on the Wichita chapter board of directors.
She is a certified practitioner for the Myers-Briggs Type Indicator® and the Hay Group’s Emotional and Social Competency Inventory. Her additional certifications include Professional in Human Resources (PHR) from the Human Resource Certification Institute and SHRM-CP designated by the SHRM.
Senior Vice President
With more than 30 years’ experience in public accounting and an intensive tax background in tax planning and return preparation, John manages client relationships and focuses on our firm prospective clients, assists industry teams in developing new prospects and meets with clients. John’s expertise includes federal and international tax strategies, growth incentives, wealth transfer and estate planning. He has worked closely with manufacturers and mid-size companies and their owners/leadership providing a variety of profit-building tax strategies.
John earned a bachelor of business administration from Wichita State University and is involved in numerous professional organizations including: Kansas Society of Certified Public Accountant (KSCPA), American Institute of Certified Public Accountants (AICPA), Wichita State Auditing and Accounting Conference planning committee, Kansas Family Business Forum, Wichita Manufacturers Association Executive Board, Risk Management Association Board of Directors and the Kansas Global Trade Service steering committee for the Brookings Institute Global Cities Initiative.
Senior Vice President
Cindy McSwain leads AGH’s outsourcing services group. Her team provides payroll, accounting, funds disbursement, controller, and other financial outsourcing services to numerous clients throughout the U.S. Prior to joining the outsourcing group, Cindy served AGH’s audit clients for 10 years, working with a wide range of middle-market, closely held and family-owned organizations.
Her current clients cross many industry sectors, including manufacturing and distribution, restaurants, retailers, medical and not-for-profit. She has participated in numerous SEC filings and public registrations and has experience in mergers and acquisitions. Cindy is a certified public accountant and a member of both the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants.