01/07/2021 7:52:15 AM
The latest Coronavirus relief bill
was signed into law on December 27, 2020, and many items could directly affect you. Below we will go through the 5000+ page bill line by line by line….
Or maybe let’s just do some bullet points!
PPP Round 1 Loans
- Covered Expenses paid with your PPP#1 Loan will now be tax-deductible. This is a biggie! Before this change, all the expenses you paid with PPP funds had to be tossed out, raising 2020 taxable income by the amount of your PPP loan. Extra YAY to this one!
- If you received an EIDL advance, it will no longer reduce the amount of your PPP forgiveness. Before this change, your PPP forgiveness amount would have been reduced by any EIDL advance payment you received.
- The forgiveness application process will be simplified for loans of $150K or less. We had high expectations this would come to fruition, so our patience has paid off! Previously, the process had been simplified for loans of $50K or less. Please continue to wait to apply for forgiveness. The banks are still waiting on updated guidance from the SBA and the US Treasury and then must update their portals.
PPP Round 2 Loans
- A new round of PPP funding was authorized.
- $284.5 Billion in funds will be available in this round through March 31, 2021.
- The SBA was given 10 days after enactment to establish regulations for PPP#2 funding. BUT as you recall, that’s the same timeline they were given on Round 1 and they didn’t even kind-of hit it.
- To obtain this round of funding you must meet the following requirements. Be aware though—SBA’s regulations may alter or add to these.
Have fewer than 300 employees
Have a 25% or greater reduction in collections in any quarter of 2020 when compared to the same quarter of 2019. For most of you, 2Q2020 will be the critical quarter that is most likely to show the necessary 25% drop.
Other Key Tax Provisions for Dentistry
Employee Retention Tax Credit:
- Extended through July 1, 2021.
- Previously you could not take advantage of this provision if you received PPP funds. That exclusion was eliminated.
- BUT this credit is only triggered if you had a greater than 50% drop in revenues in a given quarter of 2020 or a 20% drop in revenues in a given quarter of 2021, as compared to 2019.. We certainly hope there will be no 2021 drop in revenue of 20%!
- If this is of any value to you, it will most likely be based again on the 2Q2020 drop in revenues.
- This is a complex issue and intertwined with the workings of PPP forgiveness. We will release a separate detailed blog.
COVID-Related Pay Tax Credits:
- Extended to March 31, 2021.
- These are the refundable payroll tax credits for Emergency Paid Sick Leave and Emergency Family Medical Leave Pay that were set to expire on December 31.
- Again, more details need to be provided on this one. We will release a separate detailed blog.
Department of Health & Human Services (HHS) Payments
- Many of you received Phase 2 and/or Phase 3 funding from the Department of Health & Human Services. Current regulations require you to report how you used those proceeds under the rules. Reporting is due in January 2021, and possibly again in July 2021. We expect HHS to provide further guidance as to what documents will need to be submitted. For now, please save all documentation (invoices, canceled checks, and credit card receipts) for any items you purchased that would qualify as PPE Equipment & Supplies.