The Small Business Administration (SBA) has released new guidance intended to expedite the forgiveness process for certain borrowers under the Paycheck Protection Program (PPP). The simplified process generally is available for loans of $150,000 or less, which the SBA reports account for 93% of outstanding PPP loans. The guidance comes at a time when many borrowers are nearing a critical deadline regarding their applications for forgiveness.
In addition to causing untold health and economic damages, the COVID-19 pandemic has had a profound—and possibly permanent—impact on many longstanding workplace practices. For example, although working from home began as a temporary emergency response, a number of high-profile companies now say they plan to continue the practice in their post-pandemic operations.
President Biden recently announced his $1.8 trillion American Families Plan (AFP), the third step in his Build Back Better policy initiative. The announcement followed the previous releases of the proposed $2.3 trillion American Jobs Plan and the Made in America Tax Plan. These plans propose major investments in various domestic initiatives, such as expanded tax credits for families, offset with tax increases on high-income individual taxpayers and corporations.
Here’s a summary of some of the proposals:
The recently passed American Rescue Plan Act (ARPA) includes 600 pages of new legislation- a $1.9 trillion COVID relief package. The Act contains retroactive and prospective tax breaks including exclusions from income, new tax-free grant programs, and credits.
On March 17, 2021 the IRS announced an extension of the tax deadline for Individual Income Tax Returns (Form 1040) to May 17, 2021 from April 15. This extension applies to both the filing of the Form 1040 or the filing of an extension form. This also extends the due date for tax payments for individuals only for payments related to 2020 to May 17. This change does not apply to states, though it is likely some/all states will extend the deadline as well.
Recently, President Trump signed the second COVID-19 stimulus bill, which includes some rather special benefits for small businesses (i.e., companies with 100 employees or less). The new bill allows for both retroactive and prospective changes to the Employee Retention Credit (ERC). It is now possible for businesses that received a Paycheck Protection Program (PPP) loan in 2020 to potentially also benefit from the ERC. You may recall, prior to these changes, a business could either get a PPP loan or take the ERC. They could not have both. In addition, the new bill extends the ERC period to cover the first two quarters of 2021. The extended period now covers wages from January 1, 2021 to June 30, 2021. The rules for the 2021 credit are significantly different and could provide opportunities for employers that did not previously qualify for the ERC.
On November 18th, the IRS issued additional guidance regarding deductibility of the Paycheck Protection Program (PPP) loan related expenses and the news is not what we had hoped for. The guidance came in the form of Revenue Ruling 2020-27 and Revenue Procedure 2020-51.
As post-COVID recovery efforts gain momentum, many businesses are taking a fresh look at some federal stimulus and tax relief programs they had not previously considered. One such program, the employee retention credit contained in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, could be especially useful in helping companies bring back furloughed or laid-off employees.