COMPREHENSIVE COVID-19 RELIEF PACKAGE PASSED
- A third round of stimulus payments to individuals and their dependents
- Extension of enhanced supplemental federal unemployment benefits through September 2021
- Expansion of the child tax credit and child and dependent care credit
- Extension of the Employee Retention Credit (ERC)
- $7.25 billion in aid to small businesses, including for the Paycheck Protection Program (PPP)
- Increased federal subsidies for COBRA coverage
- Over $360 billion in aid directed to states, cities, U.S. territories and tribal governments, and the Senate added $10 billion for critical infrastructure, including broadband internet, and $8.5 billion for rural hospitals
- $160 billion earmarked for vaccine and testing programs to improve capacity and help curb the spread of COVID-19; the plan includes funds to create a national vaccine distribution program that would offer free shots to all U.S. residents regardless of immigration status
- Other measures that address nutritional assistance, housing aid and funds for schools.
Measures Affecting Individuals
Extended Unemployment Benefits
Child Tax Credit
Child and Dependent Care Tax Credit
Earned Income Tax Credit (EITC)
Measures Affecting Businesses
Small Businesses and Paycheck Protection Program
Employee Retention Credit
- Employers offering COVID-19-related paid medical leave to their employees would be eligible for an expanded tax credit through September 30, 2021.
- The bill increases the proposed subsidies of insurance premiums for individual workers eligible for COBRA after they were laid off or had their hours reduced to 100% (85% under the version of the bill passed by the House) through September 30, 2021.
- Funds are allocated for targeted Economic Injury Disaster Loan advance payments, as well as for particularly hard-hit industries such as restaurants, bars, and other eligible food and drink providers; shuttered venue operators; and the airline industry.
- Effective for taxable years beginning after December 20, 2020, the bill repeals IRC section 864(f), which allows U.S. affiliated groups to elect to allocate interest on a worldwide basis. This provision was enacted as part of the American Jobs Creation Act of 2004, and has been deferred several times. The provision is relevant in computing the foreign tax credit limitation under IRC section 904.
- The bill does not cancel student debt but there is a provision that would make student loan forgiveness passed between December 31, 2020, and January 1, 2026, tax-free (normally the cancellation of debt is considered taxable income).
- A corporate tax deduction will be disallowed for compensation that exceeds $1 million for the highest paid employees (e.g., the CFO, CEO, etc.) for taxable years beginning after December 31, 2026
- The limitation on excess business losses of non-corporate taxpayers enacted as part of the Tax Cuts and Jobs Act will be extended by one year through 2026.
- The threshold for third-party payment processors to report information to the IRS is lowered substantially. Specifically, IRC section 6050W(e) is revised so that the current threshold of $200,000 for at least 200 transactions is reduced to $600. As a result, such payment processers will have to provide Form 1099K to sellers for whom they have processed more than $600 (regardless of the number of transactions). This change, which applies to tax returns for calendar years beginning after December 31, 2021, will bring many more sellers, including “casual” sellers, within the 1099K reporting net.