American Rescue Plan Act of 2021
President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law on Thursday afternoon. This $1.9 trillion stimulus package contains additional funding and expansion of tax credits to qualifying small businesses, assistance to various industries that were impacted by the COVID-19 pandemic, namely restaurants, direct stimulus payments to qualifying individuals, and extensions of unemployment benefits, among other items.
Employee Retention Credit (ERC)
Last year, the CARES Act introduced the Employee Retention Credit, a refundable credit against employment taxes paid by employers experiencing either a full or partial government-mandated shutdowns or a significant reduction in revenue. It was expanded under the Consolidated Appropriations Act and was scheduled to expire at the end of the second quarter of 2021. ARPA has extended this credit through the end of 2021.
Paycheck Protection Program (PPP)
The last day to apply for PPP funding is March 31, 2021. The PPP is expanded to additional nonprofit organizations and creates a category of “additional covered nonprofit entity.” While there are still eligibility limitations, this opens funding to a significant number of organizations.
Restaurant Revitalization Fund
This $28.6 billion fund provides grants to restaurants, bars, caterers, breweries, and tasting rooms. Grants can top $5 million for individual restaurants and $10 million for restaurant groups. Affiliated restaurant groups with more than 20 locations are not eligible. Grant amounts are calculated on revenue decreases due to the pandemic. Restaurants can calculate this based on a comparison of the 2019 gross receipts to their 2020 gross receipts. The funds can be used to pay eligible expenses related to the business’s operations through the end of 2021.
ARPA includes provisions for the third round of stimulus checks. New payments are worth up to $1,400 per individual and dependent. This round of payments will expand eligibility to adult dependents for the first time and benefits phase out for individuals earning over $75,000 and married couples earning over $150,000. The payments completely phase out when an individual’s AGI reaches $80,000 ($160,000 when filing jointly).
Under the previous stimulus bill, expanded unemployment benefits were slated to expire on March 14, 2021. Unemployment benefit expiration is now extended through September 6, 2021. The final bill maintains payments at $300 per week. In addition, the first $10,200 in unemployment benefits are tax-free in 2020 for taxpayers making less than $150,000 per year. If you received unemployment benefits in 2020, you may wish to consider postponing the filing of your 2020 tax return until the IRS implements procedures for recognizing these tax-free benefits, especially if you have federal taxes due.
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If you have questions, please contact the WSRP team member you currently work with or our office at (801) 328-2011