July 23, 2020
The
New York Times
reported this morning that The White House and Senate Republicans neared an agreement today on a new economic rescue proposal that includes another round of stimulus payments to individuals, additional aid to small businesses and a partial extension of enhanced unemployment benefits, according to a summary of the agreement that was circulating on Capitol Hill.
The
draft summary
, which was obtained by The New York Times, does not include a payroll tax cut. It includes $16 billion in funds for new testing that the administration had opposed, and conditions only a portion of education funding on schools reopening.
According to the draft summary, in addition to providing aid to hospitals, schools, childcare, vaccine research, testing, etc., the proposal stimulus package includes:
Stimulus Payments:
The amount and eligibility criteria need to be determined.
Enhanced Unemployment Insurance (UI) Benefits
:
It is not likely that the additional UI payment will be $600 as it is today. It is expected that there will be a flat amount of extra UI per week during a transition period and then a new policy will kick in that will align better with the individual’s lost income.
Paycheck Protection Program (PPP):
- There will be streamline loan forgiveness for small loans under $150,000.
- Intermediate forgiveness process for loans under $1 million.
- Second round of PPP loans for businesses under 300 workers or within the SBA size threshold for their industry that can demonstrate 50% lost revenue compared to a reference period. These loans will be calculated similarly to the last round. But will have a smaller cap.
- Loan forgiveness will be expanded to include certain supplier costs, operating expenses. And damage caused by rioting.
- There will be mire generous PPP calculation for farmers and ranchers based on their 2019 gross income.
- There is also a new working capital loan offered for businesses under 300 workers that is am alternative is a second round of PPP (cannot double dip).
Finance Tax Provision:
- Enhanced employee retention tax credit.
- Tax deductions for employer purchases of testing, personal protection equipment (PPE), and certain other supplies.
- Increasing the business meal deduction from 50% to 100%.
The Washington Post
reported at 12:15 PM that Senate Majority Leader Mitch McConnell (R-Ky.) had planned to roll out a $1 trillion GOP bill this morning but that was canceled in a head-spinning series of events.
Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows emerged from a meeting with McConnell to insist there was “fundamental agreement” on the overall deal -- but simultaneously suggested breaking up the effort into smaller pieces of legislation and trying to move forward on an extension of enhanced unemployment benefits that are about to expire. A Senate GOP leadership aide said Senate Republicans opposed the White House’s new piecemeal approach, and House Speaker Nancy Pelosi (D-Calif.) also immediately shot it down.
If the bill is not released on today, it would likely slip to Monday, giving lawmakers just a few days to reach some sort of agreement before enhanced unemployment benefits will expire for more than 20 million Americans.
This is obviously a fluid situation.
We will continue to update you on new developments. Please visit our
COVID-19 Resource Page
for more alerts.
As experts on PPP loans, we are here to help you complete your PPP Loan Forgiveness Application. Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. You can contact me at
Richard.Higgins@MCC-CPAs.com
and Marty at
Marty.McCarthy@MCC-CPAs.com
. As always, we are happy to help.
Stay safe,
Rich Higgins, CPA
Managing Principal - New Jersey Office
McCarthy & Company
Sources: The New York Times and The Washington Post. July 23, 2020.
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
