The Omnibus Appropriations and Emergency Coronavirus Relief Act has now been signed into law. The Omnibus Bill contains a long awaited COVID relief package, which includes several important provisions to address critical needs resulting from financial hardships due to the pandemic. Visit this link for a summary on how the funds will be allocated to various programs.
The bill restores the Federal Pandemic Unemployment Compensation to all state and federal benefits at $300 per week, extends unemployment benefits for an additional 11 weeks, and provides $600 relief checks for every adult and child in households earning no more than $150,000/year. (As of this writing, no additional relief checks are planned to be issued). Additionally, $330 billion has been set aside in aid to small employers (including non-profits), along with funding for schools, hospitals, vaccine distribution, child-care, nutrition, and rental assistance. There is also a 1-month extension on eviction moratorium along with a continuation of student loan forbearance. Listed below are the key provisions of the Bill impacting governments, non-profits, and your employees along with a summary of the key funding programs impacting the public sector.
Key Provisions
Coronavirus Relief Fund: The deadline for states to spend Coronavirus Relief Funds has been extended through December 31,2021.
Extension of Emergency Unemployment Relief for Governments and Non-Profits: A provision in the CARES Act which provides federal support to cover 50% of the costs of unemployment benefits for employees of state and local governments and non-profits has been extended to March 14, 2021.
Pandemic Emergency Unemployment Compensation: Pandemic Emergency Unemployment Compensation (PEUC) has been extended to March 14, 2021 and allows individuals receiving benefits as of March 14, 2021 to continue through April 5, 2021, as long as the individual has not reached the maximum number of weeks. The number of weeks of benefits an individual may claim through the PEUC program has been increased from 13 to 24.
2020 Recovery Rebates: This provision provides a refundable tax credit in the amount of $600 per eligible family member. The credit is $600 per taxpayer ($1,200 for married filing jointly), in addition to $600 per qualifying child. The credit phases out starting at $75,000 of modified adjusted gross income ($112,500 for heads of household and $150,000 for married filing jointly) at a rate of $5 per $100 of additional income.
Unemployed Insurance and Self-Insured Employers: 50% federal coverage of the costs of self-insured ‘reimbursable’ employers is extended until March 14, 2021.
Extension of Certain Deferred Payroll Taxes: The repayment period for the deferment of the withholding of employees’ share of social security taxes (originally enacted in August 2020) has been extended from April 31, 2021 to December 31, 2021.
Paid Sick Leave: Refundable payroll tax credits for paid sick and family leave have been extended through March 31, 2021. The 12.5% tax credit for paid family and medical leave that was originally passed via the 2017 Tax Law has been extended through 2025.
Pension Plans: The minimum age for distributions during working retirement has been changed. The bill modifies Sec. 401(a) to allow certain qualified pensions to make distributions to workers who are 59½ or older and who are still working. The bill also provides that qualified plans will not be treated as having a partial termination under Sec. 411(d)(3) during any plan year that includes the period March 13, 2020, through March 31, 2021 as long as the number of active participants covered by the plan on March 31, 2021, is at least 80% of the number covered on March 13, 2020.
Clarification of Tax Treatment: A provision clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a Paycheck Protection Program (PPP) loan, emergency EIDL grants, and certain loan repayment assistance. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the amounts not included in income by this section or proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the amounts being excluded from gross income or loan forgiveness. The provision is effective for tax years ending after the date of enactment of the CARES Act and provides similar treatment for Second Draw PPP loans, targeted EIDL advances and grants for shuttered venue operators, effective for tax years ending after the date of enactment of the provision.
Employee Retention Tax Credit: The Employee Retention Tax Credit has been extended through July 1, 2021. The refundable payroll tax credit has been changed as well, reducing the amount of required year-over-year decline in gross receipts from 50% to 20%, while increasing the credit from 50% to 70% of works ‘creditable wages’ of up to $10,000 for each of two quarters, for a maximum per worker benefit of $14,000. Full benefits have been expanded to employers with 500 or less employees. Larger employees can only apply the credit to workers who are paid but not working. Lastly employees who receive Paycheck Protection Program loans can still be eligible for the Employee Retention Tax Credit with respect to wages that are not paid for with forgiven PPP funds.
Charitable Giving Incentives: The $300 above-the-line deduction for charitable giving incentives has been re-established for 2021 and allows a $600 deduction for couples filing jointly in 2021. A penalty has now been imposed for over-stating contributions. The bill also extends for 1 year the increased limits on deductible charitable contributions for individuals who itemize and for corporations.
Paycheck Protection Program Updates: More funding (specifically $284 billion worth) has been allocated to the Small Business Administration for the Paycheck Protection Program (PPP). Eligibility for the PPP program has been expanded to include 501(c)(6) organizations such as professional societies and local chambers of commerce. These organizations must have less than 300 employees and cannot receive more than 15% (or more than $1M) of their total revenue from lobbying. Forgivable expenses for PPP loans have been expanded to also now include supplies essential to the borrower’s operations, personal protective equipment, covered supplier costs, facilities modifications, covered worker protection expenditures, software, and cloud computing resources such as payroll service providers, human resources and accounting services. In addition, any uninsured costs to repair property damage caused by public disturbances may be claimed as eligible costs. The forgiveness application process for smaller loans of no more than $150,000 has been simplified to a 1-page form. For those organizations that have already received PPP loans, entities with 300 or less employees and that can document at least a 25% reduction in gross revenues between the same quarters in 2020 and 2019 will be eligible to apply for a second PPP loan as long as they have used up the full amount of their first PPP loan. As before, loan amounts are to be calculated as 2.5 times the average monthly payroll for the one-year period prior to the date of the loan. Applicants can still choose an 8- or 24-week covered period and must spend at least 60% of the loan amount on payroll costs. The maximum loan amount will be $2 million.
Key Funding Programs
Economic Injury Disaster Loans and Grants: $20 billion has been allocated for Economic Injury Disaster Grants. This funding targets a new round of advances for small employers located in low-income communities and that have suffered economic loss of greater than 30% and employ less than 300 employees. Emergency EIDL grants have been extended through 12/31/21. The EIDL Advance Reduction that occurred when borrowers sought PPP loan forgiveness has now been repealed.
Save Our Stages: Grants of up to $10 million are being set-aside for performance venues, independent movie theaters, and cultural institutions.
Funds to Hospitals and Health Care Providers: $3 billion in additional grants for hospital and health care providers to be reimbursed for health care related expenses or lost revenues due to the pandemic along with direction to allocate not less than 85% of unobligated funds in the Provider Relief Fund through an application-based portal to reimburse health care providers for financial losses incurred in 2020.
Substance Abuse and Mental Health Services: $4.25 billion to provide increased mental health and substance abuse services and support including:
-$1.65 billion for the Substance Abuse and Prevention Treatment Block Grant;
-$1.65 billion for the Mental Health Services Block Grant;
-$600 million for Certified Community Behavioral Health Clinics;
-$50 million for suicide prevention programs;
-$50 million for Project AWARE to support school-based mental health for children;
-$240 million for emergency grants to States; and
-$10 million for the National Child Traumatic Stress Network
Administration for Children and Families: $10.25 billion to support early childhood programs and child-care providers through $10 billion for Child Care and Development Block Grants and $250 million for Head Start.
Administration for Community Living: $100 million to address abuse, neglect, and exploitation of the elderly.
Education: $82 billion in grants for schools, including public/private schools and institutions of higher education has been allocated along with $10 billion in grants for childcare facilities. $54.3 billion has been allocated for the Elementary and Secondary School Emergency Relief Fund Formula with funds for school facilities repairs and improvements and addressing learning loss among students. $2.75 billion has been set aside for Emergency Assistance to Non-Public Schools grants. $20.2 billion has been set aside for public and private, non-profit institutions of higher education, including those that serve students enrolled exclusively in distance education, to be distributed by a formula taking into account head count and full-time equivalent enrollment. Lastly $113 million has been allocated for institutions of higher education with unmet need.
Transit Emergency Relief – $14 billion has been allocated for operating assistance based on the operating expenses of transit agencies.
We anticipate additional information will be forthcoming regarding these funding programs, so please check our blog periodically for updates. In the meantime, if you have any questions regarding the new relief package and its impacts on your organization, please do not hesitate to contact us.