Heather appeared again in this week’s Tuesday episode (December 22, 2020) of the Town of Plymouth’s “COVID-19 Daily Update” to explain the ramifications of the new COVID-19 relief bill passed by Congress earlier this week. (UPDATE: President Trump has since asked Congress to review certain aspects of the bill before he will sign it into law.)

Joking that “Christmas came early this year,” Heather explained that the bill clarified some of the questionable aspects of the earlier COVID-19 laws and relief, and provides additional relief to individuals and businesses. One of the biggest victories for small businesses is that Congress reiterated to the IRS that any expenses associated with the forgivable PPP loans are in fact tax-deductible. In this version of the law, individuals are due to again receive $600 stimulus payments, as well as $600 for each dependent. The phase-outs are the same as last time. It is likely that payments would begin rolling out very quickly this time around since the IRS already has taxpayers’ bank account information in place.

Additionally, the extra $300 per week in federal unemployment benefits due to expire at the end of the year have been extended through March 14. The program has been extended to include self-employed and gig workers who wouldn’t normally qualify for traditional unemployment through the state.

The new law also allows businesses to get another round of forgivable PPP loans. (This round is being referred to as PPP2.) While businesses who haven’t yet received a PPP loan will obviously be able to apply for one, certain businesses who have already received a loan will be able to apply for a second PPP loan. To be eligible, they will need to be able to show that during one quarter in 2020, they experienced at least a 25% decline in revenue as compared to the same quarter last year. The SBA will be coming out with guidelines surrounding the new PPP2 loans.

Another favorable aspect of the law is that Congress is asking SBA to create a simplified process for businesses with PPP loans of under $150,000. The forgiveness application will be only one page, and business owners can use estimated amounts rather than having to prove every figure. (Of course, in the event of an audit, businesses should be sure to have good records.) The SBA will be coming out with transition rules and has 24 days to produce the new process. Banks will also need to produce a simplified application.

In the years 2021-2022, business owners with meals expenses will be able to deduct 100% rather than the usual 50%. The intent of this change is to help struggling restaurants and to stimulate business-to-business activity.

Since tax software will need to be updated to reflect these last-minute tax changes and since the IRS still isn’t up to full capacity, expect delays in filing your tax return this season.