On December 27, 2020, President Donald Trump signed the Consolidated Appropriations Act, 2021 into law. The new law authorizes $900 billion in COVID-19 relief and here is a link to 5,593 pages of the new legislation:
This new relief package addresses a series of relief issues, including the following:
Another round of Paycheck Protection Program loans
Small business debt relief
Additional funding for Economic Injury Disaster Loans (“EIDL”) in low-income communities
The Employee Retention Credit has been extended through July 1, 2021
Direct stimulus payment of up to $600 per person (or $1,200 per couple) and $600 per child dependent will be made to taxpayers who meet income thresholds – with the potential for the $600 checks to be increased to $2,000 depending on Senate approval
Federal unemployment insurance benefits will be increased by $300
In addition, the new law also addresses two significant issues: (a) the deductibility of Paycheck Protection Program (“PPP”) expenses; and (b) the status of the primary leave components of the federal Families First Coronavirus Response Act (“FFCRA”).
With respect to PPP expenses, despite recent contrary IRS guidance, the new law makes it clear that businesses can deduct payroll and other business expenses as usual, even if these expenses are paid for with PPP loans. Ultimately, a PPP loan will have no impact on the deductibility of business expenses. This is addressed in Section 276 of the new law. Please keep in mind, however, that this is a new federal law that addresses the deductibility of PPP expenses. New York State has not yet issued guidance on this issue so it is possible that the PPP will be fully taxable in New York State.
As for the FFCRA, the primary leave requirements will technically expire on December 31, 2020. The components of the FFCRA, specifically the federal Emergency Paid Sick Leave Act (“EPSLA”) and the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), can be extended but offering these benefits after December 31, 2020 will be optional for employers rather than a mandated requirement. If employers choose to continue these paid leaves, they can still receive a tax credit if they follow the current EPSLA and EFMLEA rules, including job protection. The extension of the tax credit will be available for leaves through March 31, 2021. The new requirements are complicated and it is expected that further clarifying guidance will be adopted by the Department of Labor and the IRS.
Our Firm has extensive experience counseling employers and businesses on corporate, employee, and labor law issues, and preparing applicable employee policies, particularly relating to the evolving regulations during the COVID-19 pandemic. If you have any questions related to this Legal Briefing or questions related to COVID-19 reopening rules and procedures, please contact any member of our Firm at 585-730-4773. Please note that any embedded links to other documents may expire in the future.
This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2020 Law Offices of Pullano & Farrow PLLC