The Consolidated Appropriations Act, 2021 (CAA) (P.L. 116-260), which runs 5,593 pages, funds the government for its fiscal year ending Sept. 30, 2021, and makes major tax changes for businesses. The CAA also makes changes in the Paycheck Protection Program and other financial assistance options which have tax implications. The following is a brief roundup of these key changes. Most of the changes are effective after 2020, but some of them affect 2020 income tax returns.
Paycheck Protection Program Loans
Aid to hard-hit businesses. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which is incorporated into the CAA, makes two changes to the Paycheck Protection Program (PPP). The CAA includes $284 billion for new PPP loans and these loans can be forgiven tax free. The definition of expenses eligible for forgiveness has been expanded to include covered operational expenses (e.g., software, cloud computing, and other human resource and accounting needs), covered property damage costs related to riots in 2020 not covered by insurance, covered supplier costs (e.g., expenditures pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made), and covered worker protection expenditures like personal protective equipment (PPE). The covered period in which expenses are taken into account for forgiveness can end at the borrower’s choice of between 8 and 24 weeks after the origination of the loan.
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