By Steve Cleland, CPA
After months of back and forth with seemingly nothing to show for it (and immense frustration growing within the American people), it appears that Congress has reached a tentative agreement to pass much needed pandemic relief in the form of a new $900 billion bill! While there has been no formal vote yet and the bill is still being finalized and reviewed by the House Rules Committee, Congress has reached bipartisan agreement on key provisions and the bill is expected to pass sometime today. The House is expected to vote this morning and the Senate this afternoon, with President Trump indicating that he will sign the bill as soon as it hits his desk.
If (and hopefully when) this new bill passes, it will be the second largest federal stimulus package after the $2 trillion CARES act that Congress passed in March. Although many key details of the bill remain unclear at this point, below are a few highlights that we know so far:
Direct Stimulus Checks to Individuals – Those earning less than $75,000 per year ($150,000 for married filing joint) will receive a direct payment of $600 each, like the $1,200 payments earlier this year. In addition, children 17 and under will also receive $600, so a family of four could receive up to $2,400. The direct payment phases out between $75,000 and $99,000 of income.
Unemployment –The bill would extend the $300 federal unemployment supplement for 11 weeks, from the end of December through mid-March under the new deal. This is a critical provision of the Bill as the current supplement enacted by President Trump through executive order earlier this year will run out of money and end right after Christmas.
Additionally, the agreement calls for extension of the Pandemic Unemployment Assistance program which expands jobless benefits to gig workers, freelancers, independent contractors, and certain self-employed individuals affected by COVID-19. The program provides an additional 13 weeks of payments to those who exhaust their regular state benefits.
Both programs close to new applicants mid-March and then phase out entirely in early April for existing claimants.
Paycheck Protection Program (“PPP”) – The largely successful Paycheck Protection Program would be reopened and an additional $284 billion would be allocated to the program. The provisions of who would qualify remain unclear, but some of the things that have been discussed are targeted relief for severely impacted industries and a requirement that applicants must have experienced at least a 30% drop in revenue.
Also with PPP, the new bill clarifies that expenses paid with forgivable PPP funds will be deductible for tax purposes. This has been of particular interest to recipients of the first round of PPP funds (and many of our clients) as Congress was clear that these deductions should be allowed while the IRS had issued guidance stating that they were not. Assuming this language is included in the final bill, Congress will have over-ridden the IRS guidance and allowed for tax deductibility of PPP expenses. A huge win for small businesses!
Vaccine distribution – The bill includes substantial funding, approximately $20 billion for purchase of vaccines and $8 billion for vaccine distribution, to ensure that vaccine distribution continues and will be provided at no cost to all Americans.
Hospitals, Schools and Colleges will receive funding to allow them to do what is necessary to continue operations and safely re-open. This includes the expansion of Pell Grants for higher education, although the details remain unclear.
The bill also includes $25 billion for rental assistance, strengthens low-income housing, earned income and child care credits, and adds $13 billion in enhanced Supplemental Nutrition Assistance Program benefits.
Finally, the plan includes $45 billion for the transportation industry, including $15 billion for airline payroll assistance.
Not Included in the Bill - several provisions from the original proposal put forth two weeks ago were argued and ultimately removed from the final agreement, including the liability shield for employers that Republicans sought, and the bailouts to state and local governments sought by the Democrats.
This bill is long overdue. It accomplishes many critical relief efforts that are sorely needed throughout the country and reflects a successful bipartisan effort to ease the effects of the pandemic on the American people.
We will have more on this as it moves through Congress and details become clear.