As we approach the new year, it's crucial to stay informed about the latest developments…
The year is already off to a rocky start as far-right extremists stormed the United States Capitol earlier today in DC, interrupting the count of electoral college votes. The House and Senate chambers are being cleaned so the full Senate and House can resume proceedings as soon as 8pm tonight. Our thoughts and prayers go out to the families of those elected officials and their staff whose lives were put in harm’s way. There is no excuse for violently taking the law into your own hands – this is a blatant disrespect for our democracy.
The runoff election in Georgia has concluded with both seats going to the Democrats. The Senate will be split 50-50, with Vice President-elect Kamala Harris casting tie-breaking votes when needed. Sen. Chuck Schumer of New York is expected to replace GOP Sen. Mitch McConnell as majority leader and will determine which bills come to the floor for votes.
Not since former President Barack Obama took office in 2009 has the Democratic party held control over all three branches of government. Biden will need to consider which domestic priorities can get bipartisan support since Senate rules now require anything to get 60 votes to advance. The president-elect has already indicated that additional coronavirus relief will be his first priority, with members of his party vowing to rush $2,000 checks to Americans as quickly as possible. It will be interesting to see how far left the legislative agenda will play out over this administration’s first 100 days.
The new stimulus bill had two hurdles for your company to become eligible for the Employee Retention Tax Credit or ERTC.
- Eligible Employers either:
- Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or
- Experience a significant decline in gross receipts during the calendar quarter (defined as 20% or more loss in revenue).
- The number of average employees in 2019 will determine which wages are eligible wages for the ERTC.
- If an employer averaged 500 or fewer full-time employees during 2019, qualified wages are those wages, including health care costs, paid to any employee during the period operations were suspended or the period of the decline in gross receipts, regardless of whether or not its employees are providing services.
- If an employer averaged more than 500 full-time employees during 2019, qualified wages are generally those wages, including certain health care costs, paid to employees that are not providing services because operations were suspended or due to the decline in gross receipts. These employers can only count wages up to the amount that the employee would have been paid for working an equivalent duration during the 30 days immediately preceding the period of economic hardship.
Ideally, businesses that are under 500 full-time employees AND experienced a decline of 20% or more in gross receipts will see the most tax credits from the ERTC. We are currently working with our software vendor to make these changes available for clients that want to take advantage of these tax credits going back to 2020 and hope to have it completed by end of this week.
We also received this info from the SBA today that may be helpful to you, as well. Notice of two new changes to small business loans from the U.S. Small Business Administration (SBA):
- Paycheck Protection Program loan expense deductions changed by recent Omnibus bill: A brief from the Congressional Research Service, updated December 31, explains previous guidance from the Internal Revenue Service regarding recipients of forgivable loans under the Paycheck Protection Program (PPP) and their inability to claim a deduction for expenses funded from forgiven loans. The inability to claim deductions was nullified by the recently-enacted Consolidated Appropriations Act (R. 133), which included the Tax Relief Act of 2020. Under this new legislation, borrowers can now deduct expenses paid out of forgiven PPP loans.
- SBA extends the COVID-19 EIDL application deadline through December 31, 2021: On December 30, the Small Business Administration (SBA) announced that the deadline to apply for the Economic Injury Disaster Loan (EIDL) program for the COVID-19 pandemic disaster declaration is extended to December 31, 2021. Economic Injury Disaster Loans are offered at affordable terms, with a 3.75% interest rate for small businesses and 2.75% interest rate for nonprofit organizations, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. Loan applications will be accepted through December 2021, pending the availability of funds.
The majority of US organizations (61%) intend to encourage – not require – their employees to get the COVID-19 vaccination. In SHRM’s survey of employers, two-thirds (66%) say the COVID-19 vaccination is very or somewhat necessary for business continuity. Almost one-fourth (24 percent) of workers, however, say they’d balk at getting the vaccine if their employer required it.
Due to COVID-19 cases and hospitalizations reaching a statewide record high, the City of New Orleans announced a Modified Phase One, with reduced capacity limits and gathering restrictions. This will go into effect Friday 1/8/21 at 6am and will last for the next three weeks. In addition, the Parklet Pilot program. which promotes outdoor drinking and dining options for residents as part of the response to the COVID-19 pandemic, will be extended and application fees will be waived until 3/31/21. Grants up to $2,000 towards parklet expenses (including heaters for these colder months) are available through a partnership between the City and NOLABA.
Lastly, today the Department of Labor announced a final rule clarifying the standard for employee versus independent contractor under the Fair Labor Standards Act (FLSA). The effective date of the final rule is March 8, 2021. If you have any questions about this or any other items mentioned in today’s blog, please don’t hesitate to reach out.