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COVID Stimulus Bill and EEOC Vaccine Guidance

STIMULUS BILL

  • On December 27, 2020, the President of the United States signed the Consolidated Appropriations Act, 2021, which contains a number of COVID-19 stimulus provisions
  • Direct Stimulus Payments
  • Eligible individuals will receive an additional $600 direct stimulus payment (or $1,200 in the case of eligible individuals filing a joint return) plus an additional $600 for each qualifying child
  • Reductions in the amount for this round of stimulus payments will occur if the taxpayer’s adjusted gross income exceeds: $150,000 in the case of a joint return or a surviving spouse, $112,500 in the case of a head of household, and $75,000 for all other taxpayers
    • Enhanced Unemployment Insurance
    • Federal Pandemic Unemployment Compensation has been extended to include weeks of unemployment beginning after December 26, 2020 and ending on or before March 14, 2021
    • The additional Federal Pandemic Unemployment Compensation payments will be $300 per week during the above dates
    • PPP & EIDL
    • More than $284 billion is allocated for the second round of PPP loans, which are referred to as “second draw loans”
      • Second draw loans of up to a maximum of $2 million, but the borrower must: (i) have 300 employees or less; and (ii) show a loss in revenue of 25% or more from at least one quarter of 2020 as compared to that same quarter in 2019.   Borrower must have already used or plan to use its original PPP funding
      • Available until the earlier of: (i) funds being extinguished; or (ii) March 31, 2021.
      • Borrowers are eligible for a loan equal to 2.5 times their average monthly payroll costs and 3.5 times average monthly payroll costs for borrowers in the food and accommodation industries
      • Loan proceeds can be used over a period anywhere between 8 and 24 weeks and recipients can use the funds for payroll costs (including certain group benefit costs, such as group life, disability, vision and dental insurance), rent, mortgage interest expenses, utilities and new “qualifying expenses” which include covered operations expenditures, supplier costs, worker protection expenditures and property damage costs “due to public disturbances”
      • Second draw loans are forgivable but at least 60% must be spent on payroll costs
      • Certain Section 501(c)(6) not-for-profit entities are eligible to apply for a PPP loan
      • Certain borrowers in bankruptcy may apply for a PPP loan, with court approval
      • $15 billion is available for eligible independent live venue operators, independent movie theaters and cultural institutions
      • Borrowers of original PPP loans may be eligible for additional funding.  The amount of an original PPP loan that has not yet been forgiven, may be increased for eligible borrowers who: (i) returned all or part of their original PPP loan may reapply for an amount equal to the difference between the amount retained and the maximum allowable amount; (ii) did not accept the full amount of the PPP loan for which they were eligible, may request a modification to increase the PPP loan to the maximum amount permitted; or (iii) had a PPP loan in 2020 that is eligible for an increased loan amount as a result of any SBA rule (Interim Final Rule) that allows for loan increases may submit a request for an increase in the loan amount even if the initial PPP loan has been fully disbursed to the borrower
      • Existing PPP loans and the new second draw loans that are forgiven will not be included as federal taxable income, so expenses paid with the proceeds of a PPP loan that is forgiven are now tax-deductible
      • $20 billion is available for EIDL Advance grants
      • The requirement to deduct the amount of an EIDL advance from a borrower’s PPP loan forgiveness amount has been eliminated
      • A simplified one-page PPP loan forgiveness application will be available for loans of less than $150,000
      • Employee Retention Credit
        • Businesses may retroactively borrow a PPP loan and claim an Employee Retention Credit (“ERC”) for 2020
        • A borrower that receives a PPP loan is no longer prohibited from claiming the ERC; however, an ERC may not be claimed for wages paid with the proceeds of a PPP loan that have been forgiven.  In other words, a borrower that received a PPP loan in 2020 and paid qualified wages in excess of the amount of the forgiven PPP loan used to pay wages, and is otherwise eligible to claim the ERC, should be able to file amended payroll tax returns to claim the ERC
        • Borrowers that did not claim the ERC due to a PPP loan should review the ERC requirements to determine if they might be eligible to claim the ERC for qualified wages paid after March 12, 2020
        • The ERC has been extended to June 30, 2021.  The most recent computational changes to the ERC (discussed below) are only applicable from January 1, 2021 through June 30, 2021; they are not retroactive to 2020.  The ERC is increased to 70%.  The maximum amount of creditable wages has been increased to $10,000 for any quarter.  For 2021 ERC eligibility, the gross receipts test is satisfied for any quarter in the first half of 2021 in which gross receipts are less than 80% of the same quarter in 2019.  Businesses also have the option to satisfy the gross receipts test by looking at the immediately preceding calendar quarter and comparing that to the corresponding quarter in 2019.  The test to determine qualified wages remains primarily the same, but the threshold number of employees before a change in treatment has increased from 100 to 500.  A business can pay bonuses to an employee and increase the ERC (subject to the $10,000 quarter cap). Some businesses may be eligible to receive an advance payment of the ERC

EEOC VACCINE GUIDANCE

The Attorneys at Levene Gouldin & Thompson, LLP are available to provide advice and counsel concerning matters related to COVID-19.

 

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