January 22, 2021

Washington Wire: One Voice Victory on COVID Bill – Deduction of Expenses Permitted

12/21/2020

One Voice Victory on COVID Bill – Deduction of Expenses Permitted  

 
After six months of negotiations and hours of constant lobbying, One Voice has secured virtually all of our COVID-19 relief priorities to support our member companies, their suppliers, and customers.
 
In order to secure the other provisions, negotiators did not include employer liability protection or more payments to state and local governments. The bill does fix the ability to deduct PPP expenses; permits 501c6 organizations to apply for loans; expands PPP loans to include payments to suppliers; authorizes a second draw of PPP loans for businesses with fewer than 300 employees and a 25 percent revenue loss test; expands the Employee Retention Tax Credit to include PPP recipients; provides more funding for apprenticeships and includes a safeguard requiring states to help employers report when an unemployed individual refuses available work.
 
Thank you to all NTMA and PMA members and staff for your support of our successful lobbying efforts. You can learn more about how the PMA and NTMA lobby for you in Washington, D.C. and support those efforts to support you by clicking here for NTMA and here for PMA.
 
Below is an initial summary of key items included in the 5,593-page legislation. The U.S. House of Representatives is debating the legislation now, the Senate has begun in procedures and President Trump is expected to sign the bill into law within the next 24-hours.
 
For a link to the entire bill, click HERE
 
PPP Changes
  • Reverses IRS and permits those with loan forgiveness and expectation of loan forgiveness to deduct their expenses and reaffirm that PPP loans are not taxable; retroactive to CARES Act and applies to Second Draw of PPP Loans. (page 2004-2006)
  • Changes the covered period for a PPP loan, allowing the borrower to choose between 8 weeks and 24 weeks of origination (page 2055)
  • Changes definition of eligible expenditures to include supplier costs: ‘covered mortgage obligation’, ‘covered operating expenditure’, ‘covered property damage cost’, ‘covered rent obligation’, ‘covered supplier cost’, ‘covered utility payment’, and ‘covered worker protection expenditure’ (page 2050 for PPP and 2065 for PPP2)
  • Supplier Costs include those under contract prior to the covered period taking effect and are essential to the operations of the borrower at the time the expenditure was made.
  • Permit 501(c)(6) business trade associations to apply for a PPP loan, loan proceed may not be used for lobbying (page 2102)
 
Second Draw PPP Loans
  • Authorizes SBA to allow employers to apply for a Second Draw of PPP loans (page 2065)
  • Eligibility for PPP2 loans include 300 or fewer employees and demonstrate a 25% or more revenue loss test when comparing any 2020 quarter to the same quarter in 2019 (compare 4Q if your loan after Jan. 1, 2021) (page 2066)
 
Extension of CARES Section 1112
  • Provides for an extension of the payments and covered periods for 7(a)/504 covered loans (page 2157)
 
Employee Retention Tax Credit
  • Clarifies that employers who receive Paycheck Protection Program (PPP) loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds;
  • Beginning on January 1, 2021 and through June 30, 2021, increases credit rate to 70% of qualified wages with a new per-employee limit of $10,000 per quarter with a 20% revenue loss test using either same quarter 2020 vs 2019 or previous quarter gross receipts to determine eligibility (starting page 4934)
 
Apprenticeships
  • $45,000,000 shall be for the purpose of developing, offering, or improving educational or career training programs at community colleges, defined as public institutions of higher education, however, funds may not be used for non-registered apprenticeship programs (page 910);
  • Additional $185 million to expand registered apprenticeships under traditional appropriations (page 913)
 
Unemployment
  • Unemployed individuals get an additional $300/week from Dec. 26, 2020 to March 14, 2021; Pandemic Unemployment Assistance (PUA): Extends and phases out PUA, a temporary federal program covering self-employed and gig workers, to March 14 (after which no new applicants) through April 5, 2021 (page 1935)
  • States must have a place for employers to report when someone turns down a job and must notify claimants of the requirement to accept suitable work (page 1955)