Dec. 23, 2020
Federal Stimulus Law: Impact on You and Your Clients
BY BIG ‘I’ NATIONAL AND OIA
As you have likely heard by now, Congress agreed to a $900 billion COVID-19 relief package and a $1.4 trillion omnibus government funding package. We are working with the Big ‘I’ National to dissect how the specific provisions impact you and your clients. Here is a breakdown of several areas:
- Business Expenses paid for with proceeds from Paycheck Protection Program (PPP) loans are now tax-deductible
- With this legislation, Congress confirms their original intent when enacting the CARES Act back in March. Recent guidance issued by the IRS indicating that these expenses are nondeductible is now overridden. Specifically, this overturns IRS Notice 2020-32 and Revenue Ruling 2020-27 and is effective as of the date of enactment of the CARES Act and applicable to PPP loans after that date.
- PPP Reauthorization for the hardest hit businesses
- PPP reauthorization through March 2021.
- This includes an additional $284 billion for the PPP. The PPP funding includes money to allow the hardest-hit small businesses to receive a second forgivable PPP loan. In order to receive a second forgivable PPP loan, a business must have fewer than 300 employees and be able to demonstrate a revenue reduction of 25% in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. The maximum amount for these “second draw” PPP loans is $2 million.
- PPP Loan Forgiveness Process – Simplified, one page application for borrowers with PPP loans of $150,000 or less.
- Increase to Business Meals Deduction – The legislation also includes a provision to increase the business meals deduction to 100% (it is currently 50%) for 2021 and 2022.
- Other Initiatives – $166 billion for direct checks to the American people, $120 billion for extra unemployment assistance and $69 billion in funding for vaccines, testing and tracing.
- The legislation did not include liability protections or money for state and local aid as lawmakers were unable to find a compromise on those two issues. Fortunately, in Ohio the General Assembly enacted House Bill 606, so all Ohio employers are granted qualified immunity from lawsuits alleging their action or inaction exposed someone to COVID-19. This immunity exists from the date of the governor’s state of emergency order – March 9, 2020 – and ends on Sept. 30, 2021, so Ohio businesses will have immunity from these types of lawsuits for up to an 18-month period. In addition to the general immunity coverage, Ohio’s health care providers also have legal protections against litigation arising from care delivered in response to the coronavirus.
- Health insurance disclosures of direct and indirect compensation provisions – While a solution on surprise medical billing is long overdue and welcome, the provision also includes some concerning language that would require disclosure of direct and indirect compensation for brokers and consultants to employer-sponsored health plans and enrollees in plans in the individual health market.
The Big ‘I’ National continues to represent our interests in Congress on these issues and more. We will keep you apprised of any changes in the law that may impact your agency and clients.
For more information about this or anything regarding Government Regulation & Advocacy, please contact: