On December 22, 2020, just one day after the House of Representatives approved the Consolidated Appropriations Act of 2021, the Senate voted in favor of the $2.3 trillion year-end legislation. The bill includes the Coronavirus Response and Relief Supplemental Appropriations Act, which provides an additional $900 billion in COVID-19 relief. It is now on President Trump’s desk awaiting his signature.
The legislation includes numerous significant tax and Paycheck Protection Program (PPP) loan provisions:
- Tax deductions for qualified expenses paid by PPP loan proceeds, where the loan is forgiven or expected to be forgiven. For those of you who reached out to your representatives and senators, your voice was heard. We greatly appreciate your support in helping to ease the tax burden of small businesses.
- Authorization of a second round of PPP loan funding, with stipulations. To qualify, a business must be able to demonstrate a drop in revenue of at least 25% during any quarter of 2020 when compared to the same quarter in 2019.
- Authorization of a second round of stimulus checks.
- Payments will be $600 per eligible taxpayer (round one provided $1,200 per eligible taxpayer)
- Households will receive an additional payment of $600 per qualified dependent 16 years of age and younger (round one provided $500 per qualified dependent)
- The income limits for round two are consistent with those of round one
- Extensions, ranging from three months up to five years, for numerous tax provisions set to expire, including:
- payroll tax credits under the Families First Coronavirus Response Act (FFCRA)
- work opportunity tax credit
- exclusion from income of mortgage discharge on taxpayer’s personal residence
- payroll tax credits for paid leave pursuant to the Family and Medical Leave Act (FMLA)
- tax-free payment of employee student loans
- solar tax credit
- Employee retention payroll tax credit authorized under the CARES Act now available to PPP loan recipients, with limitations
- Business meals now 100% tax deductible through 2022
At Price Kong, we are ready to help navigate these changes and answer any questions you may have. We will keep you apprised of any additional guidance and regulations as they are issued in the days and weeks following the passage of this legislation that materially add to our understanding of how these new provisions will be applied. Please feel free to contact us at 602.776.6300 if you have questions or need additional information on this new legislation and how it may impact your tax situation.
About the Author
Spencer applies his extensive knowledge of federal, state, and local tax laws and regulations to ensure individuals and businesses are compliant, while providing sound tax strategies and solutions to tax issues. He is also experienced in tax controversy, assisting clients involved in federal tax disputes and compliance issues with the IRS.
Spencer also has knowledge and experience specific to numerous industries, including cannabis. He closely follows the unique tax issues related to this industry and has represented multiple dispensaries in IRS examinations and collection actions.
Spencer is a member of the Arizona Society of CPAs and the American Institute of Certified Public Accountants. He is also member of the BNI North Phoenix Business Leaders. Spencer regularly presents and writes articles on tax and accounting topics. He earned an accounting degree from the University of Arizona in 2007, and became a certified public accountant (CPA) in 2015. Outside the office, Spencer enjoys vacationing with family, bowling, and participating in church activities.
