CONSOLIDATED APPROPRIATIONS ACT, 2021
The Act itself contains over 5,500 pages of legislation. The following is a very brief summary of the provisions we feel are most relevant to most businesses and individuals. Additional information will be sent later with other items and more in-depth explanations. Additional questions regarding certain items not contained in this writing can be answered and addressed by your UHY professional.
SMALL BUSINESS DIRECT PROVISIONS, DEDUCTIBILITY OF EXPENSES PAID BY PPP LOANS
One of the biggest concerns to businesses as this bill was stalled in Washington, was the provision as to whether or not qualified business expenses paid from proceeds of the PPP loan would be deductible. The act specifically provides that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied”. This sentence and related sections of the Act effectively allow a deduction of qualified business expenses paid by the PPP loan proceeds. The Act further confirmed the forgiveness of the PPP loan is not included in income.
There are other provisions addressing economic injury and disaster loans and certain grants received which may be important to certain businesses.
PAYCHECK PROTECTION PROGRAM SECOND DRAW LOANS
The Act provides for additional loans if certain requirements are met under the provisions of the Act. Generally, to qualify, a business cannot employ more than 300 employees and there are limitations on gross receipts with a reduction of not less than 25% from comparable quarters in 2020 as compared to 2019. There are specific items required under this provision and limitation on the loan, subject to certain computations, cannot be more than $2 million.
UNEMPLOYMENT BENEFIT EXTENSION AND DIRECT PAYMENT AMOUNTS
The Act provides an additional $300 per week for all workers receiving unemployment benefits, through March 14, 2021. There are additional benefits for certain workers under specific programs that may apply to these individuals, contained in the Act.
There will be economic impact payments of $600 for individuals making up to $75,000 per year and $1,200 for couples making up to $150,000 per year, as well as a $600 payment for each dependent. This means a family of four will receive $2,400 in direct payments.
COMMUNITY DEVELOPMENT ASSISTANCE
The Act provides for $12 billion in funding for Community Development Financial Institutions and the creation of a new neighborhood capital investment program to support these institutions and help low income minority communities withstand economic impact of the COVID-19 pandemic.
VACCINE TESTING AND TRACING
The Act provides for essential funding for vaccine procurement and distribution, providing roughly $20 billion for procurement of vaccines and therapeutics, nearly $9 billion to the CDC for states for vaccine distribution and more than $3 billion for an accumulation of a strategic national inventory for future use. The Act also provides direct money to states for testing, tracing and COVID mitigation programs plus $4.5 billion for mental health funding, $9 billion in support for healthcare providers and additional money for health service providers
GRANTS FOR SHUTTERED VENUE OPERATIONS
The Act provides funds for live venue operators, live performing arts organization operators, theatrical producers, and motion picture theatre operators that meet certain guidelines in the Act. The intent is certainly to help this group of businesses affected by COVID-19. The explanation and requirements are very lengthy, but designed to give these businesses relief and help.
Among the many other provisions in the Act, there was $45 billion provided for transit agencies, airlines, and airlines contractors, airports, state Department of Transportation entities and related service workers and other businesses within the transportation industry.
The Act provides $82 billion in relief to states for K-12 programs provided to elementary and secondary schools, as well as amounts for colleges and financial aid grants for students.
The Act provides $25 billion for a first-ever emergency federal rental assistance program to be distributed by state and local governments. These funds will be targeted to families impacted by COVID-19 to make rent payments, past due rent payments and future rent payments, as well as amounts to pay utility and energy bills to prevent shutoffs.
The Act provides $10 billion to assist with childcare and to help childcare providers cover the increased operating cost during the pandemic.
Obviously the above is only a small representation of the total 5,500 pages of the Act. We felt it was important to release information as quickly as possible, given incorrect and misleading reports from the media, which confuse many of the readers as to the benefit they may receive under the Act.
UHY will send out regular updates on the various provisions as details emerge, and as we analyze the Act further. In the interim, if you have specific questions you can contact your UHY representative for immediate assistance.