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Key Points for Small Business Owners-Covid-19 Relief Items from 2021 Consolidated Appropriations Act

Updated: Jan 7, 2021


The 2021 Consolidated Appropriations Act contains several important COVID-19 relief items. The legislation itself is 5,593 pages, and the longest bill ever passed! Don't worry I can help you navigate through the updates and conflicting information out there on the Internet.


I know you already have enough on your plate trying to stay open during this pandemic. In hopes to save your valuable time, here are my key take away points for small business owners. Please note- further clarification and guidance is often released as well as updates in requirements and language. I will keep this blog as up to date as possible.

 

Second PPP Loans Available

Eligible entities are allowed to receive a second round of PPP Loans. Special rules apply for determination on whether entities qualify and include the following:

  • 300 Employees or less

  • 25% reduction in gross receipts for any quarter in 2020 relative to the same quarter in 2019

  • Special rules apply for entities that didn’t exist for some or all of 2019


Expansion of Eligible Expenses for Loan Forgiveness

The current spending requirement of 60% on payroll costs for full forgiveness will still apply. In addition to the payroll expenses, rent, and utility expenses currently permitted, covered expenses will be expanded to include:

  • Covered operations expenses

  • Covered property damage costs

  • Covered supplier costs

  • Covered worker protection expenses

  • Group insurance payments qualify as payroll costs


Revised and Expanded Retention Tax Credit

  • Amends employee retention credit to be equal to 70% of qualified wages paid to employees after December 31, 2020 and before July 1, 2021

  • Employers can elect not to have wages count as qualified wages for purposes of employee tax credit

  • Qualified wages include amounts paid to maintain a group health plan


Tax Treatment for Forgiveness of Covered Loans

  • The act permits employers to deduct expenses paid with forgiven PPP loans. This reverses the IRS position- at this time California has not conformed.

  • The right to a deduction applies to both new and existing PPP loans


Extensions & Other Items

  • Extensions of Credits for Paid Sick & Family leave until March 31, 2021

  • Extension of Deferred Payroll taxes until December 31, 2021

  • Temporary allowance for full deduction for business expenses for food and beverages provided by a restaurant incurred between January 1, 2020 and December 31, 2022

  • Extension of tax-free payments of principal or interest on qualified education loans subject to applicable limits by employers through December 30, 2025

  • PPP covered periods will be 24 weeks (with option to choose any period between 8-24 weeks)

  • Loan forgiveness applications have been simplified

  • Relief provided from certain certification requirements

  • EIDL advance will no longer reduce PPP loan forgiveness

  • All future PPP Loans capped at 2 million

 

I will be updating this blog as further guidance is posted. I hope this saved some of your valuable time! Small business owners are near and dear to my heart, and want to do what I can to help navigate through these difficult times.

 

Alexa Heter, EA CFAC

Owner of Heter Accountancy






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"Ms. Heter's knowledge and diligence in both business and personal taxes has helped my Wife and I immensely. I have employed numerous firms both in SLO and from outside the area, and Ms. Heter's attention to detail and knowledge by far surpasses any other tax professional I have used."

Aaron Acosta, Owner of Active Solutions Group, Inc. 

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