Miscellaneous Provisions of the New Stimulus Bill That May Affect Your Business in 2021
The massive, year-end catchall bill (the Consolidated Appropriations Act, 2021) that passed late last year combines $900 billion in COVID-19 aid with a $1.4 trillion omnibus spending bill and reams of other legislation on taxes, energy, education, and health care.
As a result of this catch-all approach to passing a coronavirus relief package so quickly, a number of miscellaneous relief provisions have found their way into the bill that may affect or benefit your business in 2021. Here are some of the highlights you might have missed.
The So-Called “Triple Martini Lunch” Tax Deduction
To the ire of some lawmakers and taxpayers, the new stimulus bill brings the return of the so called “triple martini lunch.” The legislation amends the Tax Reform Act of 1986 by inserting an exception to the 50% meal deduction that includes “food or beverages provided by a restaurant and paid or incurred before January 1, 2023.” This change in the law transforms the cost of these business meals from 50% to 100% tax deductible business expenses.
While the tax break remains controversial, hopefully it will help some restaurants and bars remain open throughout the coronavirus pandemic.
Shuttered Venue Grants
In order to aid certain hard-hit small businesses in the entertainment space, the new stimulus bill introduces up to $15 billion in additional relief for shuttered venues and other entertainment businesses forced to shut down or reduce capacity during the pandemic. Grants made under this new program are called “SOS Grants.”
The following entities may be eligible for these SOS Grants:
- Live venue operators or promoters, theatrical producers or live performing arts organization operators;
- Motion Picture Theatre Operators;
- Relevant Museums Operators; and
- Talent Representatives.
These SOS Grants will be administered by the SBA Office of Disaster Assistance, so if your business may qualify, lookout for applications and additional guidance from the SBA coming soon. Unlike a small business loan, these SOS Grants do not need to be repaid if the funds are used on eligible expenses. Furthermore, just like forgiven PPP funds, Congress has designated that these SOS Grants will not count as taxable income. Program compliant use of the funds is also fully tax deductible when used on qualifying business expenses.
FFCRA Tax Credits and End of Mandatory Emergency Paid Leave Policies
With the passage of the original 2020 stimulus bill came the Families First Coronavirus Response Act (FFCRA). That act generally required most employers to provide Emergency FMLA Leave and Emergency Paid Sick Leave to qualifying employees who were unable to telecommute because of COVID-19 related complications. For our original explanation on the FFCRA, see here.
Congress’s new stimulus bill does not extend the mandatory provisions of the FFCRA that required employers to give COVID-19 related leave benefits. Accordingly, after December 31, 2020, FFCRA covered employers may dispense with FFCRA leave policies entirely.
That being said, Congress did extend the FFCRA tax credits available to employers that wish to voluntarily continue offering FFCRA emergency leave and sick pay. These tax credits will be available to employers who continue to offer FFCRA benefits through March 31, 2021.
Because this voluntary extension expires March 31, employers need to act fast to determine whether they will offer these extended FFCRA benefits during the first quarter of 2021. The tax credits amount to dollar-for-dollar reimbursement for up to 80 hours of paid sick leave for most qualified employees, so the credit remains attractive for employers with the means to continue offering the benefit.
Factors employers may want to consider when determining whether or not to offer these benefits include financial hardship, administrative feasibility, potential staff shortages, employees’ telework capabilities, and virus exposure concerns in light of employers’ general duty to limit COVID-19 in the workplace. Click here to read our briefing on an employer’s duty to provide a safe workplace even in the pandemic era.
After coming to a decision, employers should work quickly to update leave policies as required and notify employees in advance of any changes.
Payroll Tax Deferral
Also, with the new stimulus bill came extended timeframes for employers and employees taking advantage of the Payroll Tax Deferral signed into effect by President Trump in August of 2020. Under the original executive order, employees were to begin repayment of their deferred taxes on January 1, 2021, and the taxes were due in full by April 30, 2021.
However, under the terms of the new stimulus, Congress has deferred repayment so that employees may repay their deferrals throughout the entire year of 2021 rather than just through April. The stimulus also provides that penalties and interest will not begin to accrue on any unpaid deferrals until January 1, 2022. This will come as relief to many employees who opted to receive these deferrals during the height of the 2020 pandemic.