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The President has now signed into law the Consolidated Appropriations Act, 2021, bringing good news for taxpayers. Some major provisions of the law:

  • Ensure tax deductibility for business expenses paid with forgiven Paycheck Protection Program (PPP) loans
  • Develop a process for small businesses with fewer than 300 employees to receive a second PPP loan if they can demonstrate a 25% reduction in gross receipts. Other PPP provisions include:
    • Businesses must have been in operation as of February 15, 2020
    • Expands PPP eligibility to certain tax-exempt organizations
    • Additional PPP covered expense categories
    • Other forgiveness-related provisions
  • Streamline forgiveness process for PPP loans of $150,000 or less
  • Allocate funds to the Small Business Administration for first and second PPP loans and Economic Injury Disaster Loans (EIDL)
  • And include appropriations for:
    • Second round of economic impact (stimulus) payments
    • Unemployment benefits supplement
    • Extension of national eviction moratorium

The most important tax-related provision ties back to deductibility of expenses paid with PPP funds. For businesses with substantial loan amounts, the impacts could be significant and in favor of the taxpayer.

If you have questions, please contact us: [email protected] or 858-565-2700.