President Biden’s COVID-19 relief plan includes help for businesses - Update: PPP deadline extended through May 31

by Benjamin R. Bostic

While headlines have mostly concentrated on $1,400 checks and other assistance to individuals and families, the recently passed American Rescue Plan Act of 2021 (ARPA) offers some significant help to businesses as well.

From extending tax credits for medical and family leave to additional Paycheck Protection Program funding, ARPA provides additional ways employers can help workers and receive tax credits.

The following is a look at some of the main ARPA features for businesses:

Employee Retention Tax Credits (ERTC)

Under ARPA, businesses now have until Dec. 31, 2021 to claim Employee Retention Tax Credits for wages and health care costs.

Additionally, ARPA provides:

• Businesses established after Feb. 15, 2020, with gross receipts of up to $1 million, are eligible for ERTC. There is a $50,000 ERTC cap per quarter for these “startup’’ businesses.
• “Severely financially distressed employers,” defined as a business that saw a 90 percent or more reduction in gross receipts as compared to the same quarter in 2019, can treat all wages as ERTC-qualified wages. Large employers' limitation on wages paid to employees not providing services does not apply to severely financially distressed employers.

The IRS recently released new authoritative guidance on claiming ERTC credits, including how businesses may still claim certain payroll costs utilized on their PPP loan forgiveness application. The agency also clarified how to determine if a government order has a more than “nominal” effect on a business resulting in a partial shutdown. For more information on IRS guidance, click here.

Families First Coronavirus Response Act (FFCRA) tax credits

Families First Coronavirus Response Act (FFCRA) tax credits apply to people who had to stay home and could not work for COVID-related reasons, including being sick or in quarantine themselves; having to care for another; taking time off to care for children.

Businesses with fewer than 500 employees can continue claiming FFCRA until Sept. 30, 2021, instead of March 31.  This allows businesses to receive tax credits up to $28,000 per employee during 2021.

Additional FFCRA-related changes in the newly passed ARPA include:

• Providing FFCRA-covered leave is now voluntary on the part of employers and not mandated.
• Qualified coronavirus-related now includes:
• Receiving coronavirus immunization.
• Recovering from a coronavirus-related condition.
• Awaiting COVID-19 test results because either the worker was potentially exposed or the test is employer-ordered.
• From April 1 to Sept. 30, employers can give workers an additional 10 days of Emergency Paid Sick Leave and claim FFCRA credits.
• FFCRA credits are based on a worker’s regular pay, up to $511 per day if leave is used for one of the expanded reasons listed above. For other purposes, the tax credit is 2/3 of an employee’s regular pay, capped at $200 per day.

Additionally, the FFCRA tax credit cap for time off under the Emergency Family and Medical Leave Expansion Act is now $12,000 (it was $10,000), with the same limits based on a worker’s daily pay as mentioned above ($511 or $200 depending on the reason for the leave).

For more information relating to FFCRA, click here.

Paycheck Protection Program

Update March 30, 2021: President Biden signs law extending PPP for small businesses until May 31. Lawmakers have extended Paycheck Protection Program (PPP) loans through May 31 (the previous deadline to get loans was March 31). The “PPP Extension Act of 2021” was passed with bipartisan support.

ARPA bolstered PPP in the following ways:

• An additional $7.25 billion in PPP loan funding is available, and some guidelines have been further relaxed.
• Loans are now available to what ARPA calls “additional covered nonprofit entities,” described in Code Sec. 501(c) other than those Code Sec. 501(c)(3), Code Sec. 501(c)(4), Code Sec. 501(c)(6), or Code Sec. 501(c)(19), and exempt from tax under section 501(a). Also, the nonprofit must have 300 or fewer employees and lobbying cannot account for more than 15 percent of activities or more than $1 million of expenditures in the last tax year.
• Digital media companies now qualify for PPP loans if they certify the money will provide local news or emergency information.

Additional ARPA aimed at helping businesses

Among the other measures included to assist businesses continuing to struggle under the economic impact of the pandemic:

• COBRA: Workers who lost their job or had a reduction in hours are eligible for a 100 percent COBRA subsidy from April 1 through Sept. 30 (including those who dropped the coverage but are still eligible and want to reapply). Employers can receive a payroll tax credit against their Medicare taxes, but must notify workers about the extended COBRA availability.
• Restaurant Revitalization Fund: Grants of up to $10 million (up to $5 million per location) are available to restaurants to compensate for COVID-19 losses, measured by comparing 2020 gross receipts against 2019. Public and government-run facilities, as well as operations with more than 20 locations, are ineligible. Expenditures made with grant money, such as payroll costs, will still be tax-deductible.
• Shuttered Venue Grants: The Small Business Administration received an additional $1.5 billion to fund grants for venues such as performing arts operators, museums, zoos, motion picture theater operators, and talent representatives. Venues that received a PPP loan after Dec. 27 can still get a Shuttered Venue Grant, minus the amount received in PPP funding. For more information on grant guidelines, click here.
• Pension help: $86 billion to assist struggling pension plans can receive assistance from the U.S. Treasury’s Pension Benefit Guaranty Corporation (PBGC). The PBGC is currently working on guidelines for how plans can qualify and apply for assistance.

Moving forward

The guidelines surrounding federal COVID-19 relief programs frequently change and are complex. Our Boyer & Ritter team keeps track of the latest developments and is ready to help.

Benjamin R. Bostic, CPA, is a director at Boyer & Ritter with experience providing tax and accounting services for closely-held businesses, individuals, not-for-profit organizations. Reach Ben at 717-264-7456 or bbostic@cpabr.com