(As of December 22, 2020)
Congress passed the $900 Billion
COVID-Related Tax Relief Act of 2020 (“COVIDTRA” or “the Act”) as part of the
Consolidated Appropriations Act of 2021, on December 21, 2020. As of this writing, President Donald J. Trump has not yet signed the Act into law. COVIDTRA extends and modifies several provisions first enacted in the
Coronavirus Aid, Relief, and Economic Security Act, as amended (“CARES Act”), Congress’ $2.2 trillion pandemic relief act that was passed in March 2020.
Below is a summary of certain provisions of COVIDTRA. Note that the portions of the Act concerning renewed funding for the P
aycheck Protection Program (PPP), including the availability of second-time loans to certain businesses, is addressed in our separate blog,
A. Employee Retention Tax Credit
The CAA extends, increases, and amends the CARES Act’s Employee Retention Tax Credit (ERTC). Most significantly, the CAA extends the ERTC for qualified wages paid through June 30, 2021, (from Dec. 31, 2020, in the CARES Act) and increases the credit base to 70% of such wages (from 50% in the CARES Act). The CAA also increases the ERTC base to $10,000 of qualified wages per employee per calendar quarter (from $10,000 per employee in the aggregate under the CARES Act). Eligible employers may also seek advance payment of the ERTC for any calendar quarter. Advance payments are generally estimated based on average quarterly wages from 2019.
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On December 21, 2020, Congress agreed to a $900 billion stimulus bill, passed as The Consolidated Appropriations Act, 2021 (“the Act”). The 5,593-page Act includes funds designated for direct relief, additional money for forgivable Paycheck Protection Loans and tax relief measures, but does not include funding specifically for restaurants or hotels.
Paycheck Protection Program Second Draw Loans: The Act sets aside $300 billion in additional Paycheck Protection Loans. Of that, $15 billion is earmarked for live entertainment venues and $20 billion is set aside for businesses in low-income communities. Businesses with fewer than 300 employees are eligible for a maximum of $2 million in loans.