Legislative Update: COVID-19 Relief Bill Signed

Max Shenker
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The President signed the $2.3 trillion dollar COVID-19 relief and government funding bill on Sunday, December 27, 2020.

Among the COVID-19 relief changes in the bill are:

Employee Retention Credit

  • Extended through June 30, 2021
  • Retroactively allows employers who received PPP to also claim ERC with respect to wages that were not paid for with forgiven PPP loans.
  • For 2021 only,
    • Makes the credit available to public colleges and universities as well as public entities whose primary function is providing medical or hospital care
    • increases the credit from 50% to 70% of qualified wages
    • Increases qualified wages from $10,000 total to $10,000 per quarter
    • expands eligibility by reducing the reduction in gross receipts test from 50% to 20%
    • increases the 100-employee delineation for determining qualified wages to 500 employees

PPP

  • Additional funds available for PPP loans with priority for businesses that never received the loan
  • Opportunity for some businesses to receive a second PPP loan
  • Allows the deductibility of expenses paid for with forgivable PPP funds providing a double-benefit

Tax Extenders

  • Extends the Work Opportunity Tax Credit (WOTC) for five years
  • Extends the Federal Empowerment Zone Tax Credit (FedEZ) for five years
  • Extends the Indian Employment Credit (IEC) for one year

There is also a new retention credit for 2020 qualified disasters patterned after credits which have been made available following previous natural disasters.

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