[vc_row][vc_column][vc_column_text]This morning  (12/21/2020) the text of the new Additional Coronavirus Response and Relief (ACRR) legislation was released and we have prepared a short 10 minute video summarizing some of the highlights. If the legislation is passed by Congress and signed into law, it will include the following items:

  1. PPP Deductibility – Expenses used to obtain loan forgiveness will be deductible.
  2. EIDL Grant taxability – The EIDL Grant (up to $10,000 received in April) will be tax free and related expenses will be deductible.
  3. EIDL Grant impact – The EIDL Grant will no longer reduce PPP loan forgiveness. Under the CARES Act, if a practice received a $100,000 PPP and $10,000 EIDL, it would be eligible for $90,000 forgiveness and be left with a $10,000 PPP loan. That adjustment is being eliminated allowing for the potential to obtain full forgiveness.
  4. Simplified application – PPP loans of under $150,000 will be eligible for a one page simplified forgiveness application but still must retain documentation and meet the requirements of the program.
  5. 2ndRound PPP – If your practice incurred a 25% or greater reduction in collections in any 2020 calendar quarter compared to 2019, it may be eligible for a 2nd PPP loan. Most practices should have incurred such a reduction for the 2nd quarter that includes April – June 2020. We need additional time and guidance to determine if there will be other limitations.
  6. Stimulus payments – Taxpayers with under $150,000 adjusted gross income (married filing joint) or $75,000 (single) will be eligible for an additional $600 stimulus payment or 2020 tax credit.
  7. Meals – Business meals provided by a restaurant paid in 2021 and 2022 will be 100% deductible but still require normal documentation including the business purpose, who attended, and what business was discussed. There is no change to business meals paid in 2020.It is important to note that even if this legislation is passed without changes, it will take the Treasury Department, SBA, and IRS a few weeks or months to clarify some details.Stay safe and healthy,Rosen & Associates, LLP

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Headlines (12/16/2020)

  1. If you have received additional HHS Provider Relief funds recently, please set aside 40 – 45% for taxes
  2. Continue to monitor our newsletters as we will be providing updates if any stimulus agreement is passed and signed into law
  3. PPP Loans
    • For PPP loans, do a full-time equivalent (FTE) check to make sure your 12/31/20 FTE’s meet the safe harbor requirements
    • We continue to recommend waiting to apply for forgiveness
    • Currently, the expenses used for the PPP loan forgiveness are still nondeductible in 2020

HHS Funding

Many practices are beginning to receive the next round of HHS funding.

To do:  HHS Provider Relief Funds are considered taxable income. You should set aside approximately 40% – 45% for taxes in addition to any tax projection numbers we may have already communicated.

***According to the new HHS guidance, HHS considers taxes imposed on the Provider Relief Fund payments to be an eligible use of these funds.

https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/faqs/provider-relief-fund-general-info/index.html#use-of-funds

PPP Full Time Equivilant (FTE)

 

The 24 week covered period for your PPP loan is likely over and you are waiting to apply for forgiveness. We recommend that you continue to wait, but you need to make sure you satisfy the FTE rehire safe harbor requirement.

 

To do:  To qualify for forgiveness, you need to meet the safe harbor test. Your full-time equivalent count for the week including 12/31/20 must be the same as it was on 2/15/20, less allowed reductions mentioned below. FTE’s using paid vacation time still count as an employee.

The practice may exclude any reduction in FTE’s due to the reasons below:

  1. The practice made a good-faith written offer to rehire an employee and the employee rejected the offer
  2. Employees who were fired for cause
  3. Employees voluntarily resigned or requested a reduction in their hours.

Stimulus Bill

 

In the next few days or weeks there will likely be a new stimulus bill passed by Congress.

To do: Continue to make planned tax payments and follow our newsletters for updates.  There could be new programs or opportunities in the final bill, but we will need to wait until they have enacted changes.

Stay safe and healthy,

Rosen & Associates, LLC
1800 West Park Drive, Suite 300
Westborough, MA 01581
RosenDentalCPA.com
info@RosenCPAGroup.com
508-926-2400[/vc_column_text][/vc_column][/vc_row]