In recent days, Congress agreed to a stimulus bill that provides a number of changes that are designed to help small businesses and individuals who are still suffering economically from the COVID-19 crisis.

For individuals, the legislation provides for a second round of stimulus checks. As of this writing, the expected amount is $600 per taxpayer and qualifying child, but there are discussions to increase the amount (up to $2,000). These payments are made to individuals making $75,000 or less (or $150,000 or less for those who are married-filing-jointly). Payments to taxpayers earning over those amounts will be phased out at a rate of $5 per $100 of income over $75,000 (or $150,000 if MFJ)

Good news for businesses who received a loan through the PPP program: this new legislation takes away the uncertainty as to whether or not the forgiveness of those loans would end up being taxable. Thankfully, Congress addressed that issue clearly and businesses who have part or all of their loan forgiven will not end up paying tax on the amount forgiven.

There will be a second round of PPP available for businesses. A second draw for employers with fewer than 300 employees and a year-over-year quarterly reduction of at least 25% of income (gross receipts) will be permitted. This provision is designed to help businesses who suffered more severe setbacks during the pandemic. One sticking point that may end up and keep a number of businesses from claiming this 2^nd batch though is that they will be required to affirm under penalties of perjury that they need the loan to continue operations. One additional requirement is that all funds received previously must be used up before applying for the second round. These loans will be available until March 31, 2021.

Another bit of good news is that anyone receiving an Economic Injury Disaster Loan (EIDL) advance will no longer be required to reduce the amount of PPP loan forgiveness granted by their EIDL advance.

Lastly, in the prior legislation, employers could not receive a PPP loan while also claiming the Employee Retention Credit (ERC). That has been removed in this new legislation, meaning there will be some businesses who will be able to claim the credit retroactively for 2020 wages paid in a quarter where they were either partially or fully closed down due to a government mandate and continued to pay wages while they were shut down or suffered a decline in revenue from the prior year of over 50%. We will be reaching out to businesses who we expect will be eligible to claim this credit, but please feel free to contact us if you have any questions. There are also changes for 2021 that could allow more employers to qualify for this credit.

As always, please reach out if you have any questions or concerns. We wish you a safe and happy new year!

--The Team at Rader & Rader