COVID-19 Funding Assistance Update – American Rescue Plan Act of 2021

Thursday afternoon, President Biden signed the American Rescue Plan Act of 2021 (“ARPA”) – Withum has summarized some of the highlights for here, and will be building out more guidance on our Stimulus Headquarters in the coming days and weeks as more guidance becomes available:

Changes to the PPP – the ARPA made the following notable changes to the PPP:

  • Eligibility for the PPP extends to additional not-for-profit entities – eligible organizations include all 501(c) entities that are also exempt from tax under 501(a) of the IRC. This expands the previous included entities of 501(c) (3), (4), (6) and (19) entities.
  • Companies eligible to apply for the Shuttered Venue Operators Grant are also now eligible to receive the PPP2 – this was previously disallowed.

Extension of the ERC the ERC program has been extended for two additional quarters through the end of 2021. Recipients eligible for the ERC during all four quarters of 2021 can now receive up to $28,000 in credits per employee. The ARPA did not make any changes to the 2020 ERC program. It is noteworthy to mention that while the legislative path has been created for the 2021 program, the IRS has yet to release guidelines – last week, Notice 2021-20 was released with respect to the 2020 program. The extension of the ERC also provides a path for certain start-up businesses to receive a maximum of $50,000 per quarter credit.

Family and Sick Leave Credits – these credits originally created under the FFCRA legislation in March 2020 and extended by the CAA to March 2021 have now been further extended to September 2021. In addition, the following notable changes were made:

  • The sick leave credit now includes any leave that is due to a COVID-19 vaccination or recovering from any condition relating to such vaccination.
  • The amount of credit eligible to be received by an employer for paid family leave increases to $12,000.
  • The paid sick leave day limitation of 10 will reset for each employee after March 31, 2021. This would allow taxpayers to receive credits for employees who previously ‘used’ their limitation if such employee needs more sick time due to an allowable reason between April 1 and September 30.
  • These still remain voluntary for employers to participate in during 2021, the mandate was not reinstated.

Recovery Rebates – among other provisions aimed at individual aid, stimulus checks of $1,400 will be paid to eligible taxpayers. Taxpayers plus eligible dependents will each receive $1,400. Phaseouts for this round of stimulus is tighter than the last as part of a congressional compromise – single taxpayers will begin to phase out at $75,000 of AGI and will be completely phased out at $80,000. Married filing joint phaseout begins at $150,000 and ends at $160,000. Other benefits to individuals will be discussed below.

Targeted EIDL Advances – $15 billion in funding has been appropriated to pay out targeted EIDL advance payments – these amounts are tax-free grants offered to businesses who were severely impacted by the pandemic. $5 billion has been specifically allocated to businesses that employ less than 10 employees and have an economic loss greater than 50%

Restaurant Revitalization Fund – this fund was created with appropriations of $28.6 billion to assist restaurant owners. $5 billion of this is appropriated specifically to businesses with less than $500,000 in gross receipts during 2019. The program will be administered by the SBA and has the following parameters:

  • Grants will be provided on the basis of pandemic-related revenue loss from 2019 to 2020. The amount of the grant is required to be reduced by any PPP funding that was previously received by the business
  • Eligible business include restaurants, food stands, food trucks, food carts, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility of a alcohol producer where the public may taste, or other similar businesses patrons assemble for the primary purpose of being served food/drink.
    • Eligible businesses cannot operate more than 20 locations, regardless of whether those locations do business under the same name or different names
  • The maximum amount of grant provided to any business will be $10 million in aggregate, or $5 million per location.
  • Grants can generally be used for payroll costs and operations expenditures – it is unclear whether a reporting system will be in place to monitor the spending of the funds, however the ARPA does dictate that unused funds must be returned.
  • Eligible entities are required to certify that economic uncertainty makes the grant request necessary and that they did not also apply for a SVOG

Shuttered Venue Operator Grants – an additional $1.25 billion has been appropriated to this program, which was created by the CAA in December 2020 and still has not yet opened.

Extension of Unemployment Programs the ARPA extends $300-per-week supplement to unemployment benefits which expire March 14. The supplement will extend through September 6, 2021.

Provisions Targeted to Individuals – the ARPA also includes enhancements to the earned income tax credit, child and dependent care credit and child tax credit. Most notably, the ARPA makes the first $10,200 of unemployment income for taxpayers with an AGI of less than $150,000 tax free in 2020.

This information is provided by Withum.  Visit Withum’s COVID-19 Resource Center for insights to help you and your business during this challenging time. Looking for more COVID-19 Funding Assistance Updates? Check out our News page.