ANNIE FAIRCHILD, CPA SHALINI DABAS, CPA - CONSOLIDATED APPROPRIATIONS ACT - DEC 2020 - AFairChild, PC
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1/7/2021
CONSOLIDATED
APPROPRIATIONS ACT
– DEC 2020
Presented by AFairchild PC
01/07/2021
www.afairchildpc.com
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ANNIE FAIRCHILD, CPA
SHALINI DABAS, CPA
2
11/7/2021
The Consolidated Appropriations Act (CAA)
Subtitle B - Sec 271 – short title: COVID-related Tax
Relief Act of 2020 (1965)
Title III – short title: Economic Aid to Hard-Hit Small
Businesses, Non Profits and Venues Act – being called
the “Economic Aid Act” (2042)
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Topics
◦ Rebates
◦ Extension of Deferred Payroll Taxes
◦ PPP Loans – 1st and 2nd Round
◦ Shuttered Venue Operators
◦ Extension and Expansion of Credits for Paid Sick and Family Leave
◦ Unemployment Insurance
◦ EIDL
◦ Other Information
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21/7/2021
Rebates (1966)
On the 2020 tax return, each qualified individual will receive a credit (unless already
received a rebate check):
$600 (CAA(1966))+ $1,200 (CARES act(1999))per individual = Total of $1,800 credits per adult
individual
$500 per child from the CARES act
Each individual includes the Taxpayer, Spouse and each qualifying child
Reduced if AGI is over:
$150,000 Married Jointly
$112,500 Head of Household
$ 75,000 Single/Married Separately
NOTE: The rebate is based on 2019 tax returns and will be “trued up” on the 2020 returns.
The CAA Rebates Should be mailed out no later than 01/15/2021
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Deferred Payroll Taxes (2003)
President signed Executive Order in August 2020
An employee had the option to defer payroll taxes from September to
December 2020 and repay by April 30, 2021
CAA extended the repayment to 12/31/2021
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31/7/2021
PPP Loans – 2nd Round (2064)
◦ Within 10 days of enactment of the law, the SBA will issue regulations (2042)
◦ The Covered Period goes through 03/31/2021
◦ ADDITIONAL $284,450,000,000 available (2117)
◦ Not less than $15 billion made by Community financial institutions
◦ Not less than $15 billion made by Credit unions and other small banking institutions
◦ Not less than $15 billion made to businesses with 10 employees or less
◦ Not less than $35 billion to those that have not received a loan yet
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PPP – 1st and 2nd Round
◦ PPP Funds are NOT includable in taxable income (2004)
◦ PPP Funds DO increase basis (very good news!)
◦ Expenses paid with PPP Fund ARE deductible for tax purposes (also very
good news!)
◦ If you did not get PPP in the 1st round, you can now apply
NOTE: Need to separately report PPP and EIDL funds on your financials
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41/7/2021
PPP Loans – 2nd Round (2064)
Eligible Entity:
◦ Businesses, Non profits, Self Employed, Sole Proprietor, Independent
Contractor
◦ Employs not more than 300 individuals
◦ Gross receipts in 1st, 2nd, 3rd or 4th quarter 2020 that have a 25%
reduction in gross receipts compared to the same quarter in 2019
◦ Certain excluding provisions if the entity has relations with China
or Hong Kong and those primarily engaged in political activities
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Revenue Reduction Calculation
Subsection (c)(1)(iv)(B) of the IFR provides that a borrower
that was in operation in all four quarters of 2019 is deemed to
have experienced the required revenue reduction if it
experienced a reduction in annual receipts of 25 percent or
greater in 2020 compared to 2019 and the borrower submits
copies of its annual tax forms substantiating the revenue
decline. This provision will allow a borrower to provide annual
tax return forms to substantiate its revenue reduction.
(SBA Final Regulations 01/06/2021, page 7)
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51/7/2021
PPP Loans – 2nd Round (2064)
Calculated by the lesser of 2070 :
Average total monthly payment for payroll costs incurred or paid during the
1 year period before the date on which the loan is made or the 2019
calendar year (which ever is the higher amount) X 2.5 (3.5 for those with
NAICS Codes starting with 72 – hotels and restaurants) 2073
OR
$2,000,000 (the maximum amount of the loan)
◦ Different calculation for seasonal employers and entities not fully
active in 2019
◦ Certification that was required with the 1st PPP is not required with
the 2nd PPP
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NAICS Code 72 – Accommodation and
Food Services
◦ Hotels ◦ Mobile Food services
◦ Bed and Breakfast ◦ Drinking places (Bars)
◦ RV Parks and Camps ◦ Restaurants
◦ Rooming Boards, Dormitories, ◦ Snack Bars
Boarding Houses
◦ Special Food Services
◦ Food Service Contractors
◦ Caterers
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61/7/2021
PPP Loans – 2nd Round – Forgiven
amount (2064, 2078)
Expenditures during an 8 or 24 week period:
60% or more - payroll costs (includes dental, vision, group life, disability and retirement costs)
PLUS
Up to 40% - other costs:
◦ Mortgage interest
◦ Covered operations expenditures
◦ Payment on any covered rent obligation
◦ Covered utility payments
◦ Covered supplier costs
◦ Covered worker protection expenditure
◦ Covered property damage
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Additional Allowable Use of PPP Funds (2042)
Applied to both 1st and 2nd Round PPP Loans (except not for loans that have already been
forgiven) (2052)
◦ Covered Operations Expenditures – business software, cloud computing software/services (2046)
◦ Covered property damage costs – cost related to property damage and vandalism or looting
due to public disturbances that occurred during 2020 and that was not covered by insurance
or other compensation
◦ Covered supplier costs – costs essential to the operations of an entity, made pursuant to a
contract or order in effect BEFORE the PPP loan funded OR, with respect to perishable goods, in
effect before or anytime during the PPP loan
◦ Covered worker protection expenditures – Operating or capital expenditures to comply with
Dept of Health and Human Services, the CDC or any other governing organization.
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71/7/2021
PPP - Forgiveness Application (2055)
Simplified for loans up to $150,000
◦ MUST sign and submit to lender a certification not later than 24 days after the
enactment of the Economic Aid to Hard Hit Businesses Act (12/28/2020) – therefore,
24 days is 01/21/2021
◦ Certification not more than 1 page
◦ Must include:
◦ A description of the number of employees the eligible recipient was able to retain
because of the covered loan
◦ The estimated amount of the loan spent on payroll costs
◦ The total loan value
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PPP – Increase the 1st loan due to
updated regulations (2084)
If your first loan has already been forgiven, you can not go and ask for an
increase on the first loan or to have more forgiven on the 1st loan. (2052)
If you returned part of your loan, you may reapply for a loan for an amount
equal to the difference between the amount retained and the maximum
amount applicable.
If you did not accept the full amount of an included covered loan, you may
request a modification to increase the amount of the loan to the maximum
amount applicable.
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81/7/2021
PPP Loan Audits (2060)
◦ Within 45 days after the enactment of this law, the SBA must submit an
Audit Plan to Congress:
◦ Policies and Procedures for audits
◦ Metrics to be used to determine which loans will be audited
Then provide a monthly report concerning audits conducted
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PPP – Seasonal Employer Definitions
◦ During the preceding calendar year, had gross receipts for any 6
months that were not more than 33.33% of the gross receipts of the
employer for the other 6 months of that year. (2093)
◦ Calculate payroll using any 12 week period between 02/15/2019
and ending 12/15/2020 – for the first round PPP
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91/7/2021
PPP -2nd Round Application
◦ SBA Form 2483-SD or a lender’s similar form
◦ Required documentation
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Shuttered Venue Operators 2124
(Economic Aid to Hard Hit Small Businesses)
Available to:
◦ Live venue operator or promoter
◦ Theatrical producer
◦ Live performing arts organization operator
◦ Relevant museum operator
◦ Motion picture theatre operator
◦ Talent representative that meets certain requirements 2125
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101/7/2021
Shuttered Venue Operators 2124
(Economic Aid to Hard Hit Small Businesses)
Certification of Need – grant necessary to support ongoing operations
Priorities in awarding the grants
If in operation 01/01/2019, 45% of the Gross Earned Revenue during 2019
Used for costs incurred during the period 03/01/20 to 12/31/2021 – same
costs as PPP for forgiveness 2148
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Shuttered Venue Operators 2124
(Economic Aid to Hard Hit Small Businesses)
Grant is NOT to be included in income and expenses can be
deductible.
DO NOT GET THE PPP – Can not get both grants
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111/7/2021
Extension and Expansion of Credits for
Paid Sick and Family Leave (2033)
◦ Credits were set to expire 12/31/20, the date has been extended to
03/31/2021
◦ Expands the credit to self-employed individuals (and also to family
members of the self-employed individual
◦ Self Employed can elect to use net earnings from prior year
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Unemployment Insurance
Benefits are extended past 12/31/2020 to 03/14/2021 (with extension
through 04/05/2021 (NOTE: No pandemic unemployment assistance will
be available after 04/05/2021) (1929)
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121/7/2021
EIDL (Economic Injury Disaster Loan)
Forgiven income (up to $10,000 granted in the CARES act (27)) is not
includable in taxable income and the expenses are deductible (2009)
EIDL is no longer deducted from the PPP forgiveness calculation (NEW
forgiveness form)
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John Maxwell Groups
◦ Bryan McLemore, AFairchild’s Director of Leadership Development
◦ Leading John Maxwell Groups for AFairchild clients
◦ No cost to our clients
◦ Different groups – Owners, Employees, Etc
◦ More information coming later this month
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131/7/2021
Other Information
LOSS - If you have a personal or C Corp net operating loss in 2018, 2019,
2020, you can carry that back 5 years.
MEALS - For 2021 and 2022, Meals are 100% deductible (as opposed to
50% deductible) – note that entertainment expenses are still not
deductible
Charitable Contributions - $300 for those that do not itemize
4th Quarter estimated payments are due 01/15/2021
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Resources
This presentation will be on our website
NOTE: This presentation was prepared with information available as of 01/06/2021.
Information and guidance will likely be changing. Please ask your CPA for advice for
the most recent and relevant information.
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141/7/2021
ANNIE FAIRCHILD, CPA annie@afairchildpc.com
SHALINI DABAS, CPA shalini.dabas@afairchildpc.com
214-731-7664
www.afairchildpc.com
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