by Karen Stern
The Consolidated Appropriations Act of 2021 (CAA) contains billions of dollars in additional stimulus funding in response to COVID-19, and numerous other provisions. Here are some ways the CAA can impact your company’s bottom line.
• Paycheck Protection Program (PPP): First-draw and second-draw borrowers have access to another $284 billion in funding for forgivable loans through the PPP. New loans can be made through March 31, or until funding runs out. Second-draw loans are available for smaller and harder hit businesses, including businesses, certain nonprofits, self-employed individuals, sole proprietors and independent contractors. The CAA also expands the allowable uses for PPP funds.
• EIDL Grants: Businesses in low-income communities have access to $20 billion in new EIDL grants. Live venues, independent movie theaters and cultural institutions have access to $15 billion in EIDL grants.
• Employee Retention Credit (ERC): The ERC, created by the CARES Act, is a refundable credit against payroll tax to encourage businesses to maintain their workforces. As of January 1, 2021, the CAA increases the credit from 50% of qualified wages to 70%, expands eligibility and increases the threshold for a business to be considered a “large employer” from 100 to 500 employees.
• Business Meals Deduction: For 2021 and 2022, businesses can deduct 100 percent for food and beverages “provided by a restaurant.” It is anticipated that the IRS will provide guidance on the deduction, including the meaning of “provided by a restaurant.”
• Deferred Payroll Taxes: Businesses could withhold their employees’ share of Social Security taxes from September 1, 2020, through December 31, 2020. Originally, those that did were told to increase the withholding and pay the deferred amounts on a prorated basis from wages and compensation paid between January 1, 2021, and April 30, 2021. The CAA now grants employers all of 2021 to withhold and pay the deferred taxes.
At more than 5,000 pages, the CAA contains several components that could impact your business and personal taxes. To discuss this further, contact Karen Stern, Partner in Charge, Entrepreneurial Services Group at Brown Smith Wallace, at firstname.lastname@example.org or 314.983.1204.
Karen Stern, CPA, (email@example.com), partner in charge, Brown Smith Wallace Entrepreneurial Services Group, provides tax and accounting services for companies ranging from start-ups to $20 million in revenue.