Important Tax Provisions of the Consolidated Appropriations Act
The Consolidated Appropriations Act package signed by President Trump on December 27th after being passed by Congress on December 21st contains a number of important tax provisions designed to assist many individual and business taxpayers.
Individual Stimulus checks
Subject to income limitations, eligible taxpayers will receive payments of up to $600 for each adult and $600 for each dependent. Treasury Secretary Mnuchin expects the initial direct deposits to begin arriving in taxpayers’ accounts via direct deposit the following week.
PPP loans – Additional Funding and Clarity Regarding Deductibility of Related Expenses
Certain small businesses are eligible for a second round of PPP loans, with stricter rules to determine eligibility for need based funding. Eligibility to certain industries such as local newspapers, TV and radio broadcasters, churches and faith-based organizations has been expanded.
Additionally, Congress clarified the treatment of expenses related to PPP loans forgiven or reasonably expected to be forgiven. In Notice 2020-32, IRS previously issued that such expenses were not deductible. The Consolidated Appropriations Act clarified to state that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied” for such expenses. Congress has also made changes to simplify the forgiveness application.
Other tax changes
The employment tax credit related to an employer’s portion (6.2%) of FICA taxes has been extended for certain employers.
Certain energy tax credits have been temporarily extended.
Business meals (not entertainment expenses) have been temporarily increased to 100% deductible for 2021 and 2022.
The stimulus package also contained numerous other important provisions that we will continue to monitor as additional information is released.
Questions?
Please contact a member of the WCS Tax Department with any questions.
