The leaders of the House and the Senate announced Sunday evening they had agreed on another Covid-19 bill. The House and Senate did pass the bill on Monday as presented by the leaders. Now the bill has to make its way to President Trump, who is expected to sign it into law.
The bill is a 5,593-page pdf document, double spaced. Here is a quick summary of items we found in this bill in the roughly 1 hour that we read it. Keep in mind, the following is a quick read of the 5,593 pages.
ECONOMIC IMPACT PAYMENTS - $600 per taxpayer, $1,200 for MFJ return, plus $600 per qualifying child. Same AGI limitations as last spring’s Act including the same phaseout, same definition of qualifying child (under age 17, etc.), not allowed to anyone who is eligible to be claimed as a dependent, can only be offset as before, etc. New items appear to include:
1) No payment to anyone who died prior to January 1, 2020.
2) Advance payments to be based on 2019 tax return. It is part of the credit allowed on the 2020 return, reduced by the advance payments the taxpayer received.
3) Direct deposit looks like it could be made into an account where a taxpayer made a direct payment of the balance due on the Federal tax return.
4) SS, RRTA, VA, recipients will get direct deposit as before.
5) It looks like these advance payments cannot be made after January 15, 2021, except for US possessions with mirror taxation. This would basically mean only direct deposits will get the advance money. It looks like everyone else will have to wait until they file their 2020 returns.
PAYCHECK PROTECTION PROGRAM – Expenses will NOT be reduced in connection with the forgiveness of the PPP loans. Taxpayers can elect a covered period ending at the point of their choosing between 8 weeks and 24 weeks after origination of the loan. A simplified forgiveness form is to be created by SBA within 24 days of this law’s enactment, for anyone who borrowed under $150,000. (The PPP discussion starts on page 2042 of the bill.)
EIDL GRANTS – The grant is not taxable and expenses will NOT be reduced in connection with these grants.
SICK AND FAMILY LEAVE CREDITS – Although the requirement for small employers to pay sick leave and family leave ends December 31, 2020, these credits have been extended through March 31, 2021, for employers who voluntary make the payments. Self-employed taxpayers can elect to use their average daily SE income from 2019 instead of 2020 to compute these credits for themselves.
EXTENDERS – Some were made permanent, some were extended through 2025, some were extended for different periods, and some were eliminated.
COLLECTING DEFERRED SOCIAL SECURITY TAXES FROM EMPLOYEES’ PAYCHECKS – The current period for employers to withhold these deferred SS taxes was January 1, 2021-April 30, 2021. This bill appears to change this to the period January 1, 2021-December 31, 2021.
EDUCATOR EXPENSE – Includes personal protective equipment, disinfectant, and other supplies used for the prevention of the spread Covid-19.
Here are a few specific topics and the page they start on:
- Unemployment Insurance issues begins on page 1927.
- COVID-related Tax Relief Act of 2020 begins on page 1965 (TOC below)
Sec. 271. Short title; table of contents.
Sec. 272. Additional 2020 recovery rebates for individuals.
Sec. 273. Amendments to recovery rebates under the CARES Act.
Sec. 274. Extension of certain deferred payroll taxes.
Sec. 275. Regulations or guidance clarifying application of educator expense tax deduction.
Sec. 276. Clarification of tax treatment of forgiveness of covered loans.
Sec. 277. Emergency financial aid grants.
Sec. 278. Clarification of tax treatment of certain loan forgiveness and other business financial assistance under the CARES Act.
Sec. 279. Authority to waive certain information reporting requirements.
Sec. 280. Application of special rules to money purchase pension plans.
Sec. 281. Election to waive application of certain modifications to farming losses.
Sec. 282. Oversight and audit reporting.
Sec. 283. Disclosures to identify tax receivables not eligible for collection pursuant to qualified tax collection contracts.
Sec. 284. Modification of certain protections for taxpayer return information.
Sec. 285. 2020 election to terminate transfer period for qualified transfers from pension plan for covering future retiree costs.
Sec. 286. Extension of credits for paid sick and family leave.
Sec. 287. Election to use prior year net earnings from self-employment in determining average daily self-employment income for purposes of credits for paid sick and family leave.
Sec. 288. Certain technical improvements to credits for paid sick and family leave.
- Division EE - Taxpayer Certainty and Disaster Tax Relief Act of 2020 begins on page 4870 (TOC below)
TITLE I—EXTENSION OF CERTAIN EXPIRING PROVISIONS
Subtitle A—Certain Provisions Made Permanent
Sec. 101. Reduction in medical expense deduction floor.
Sec. 102. Energy efficient commercial buildings deduction.
Sec. 103. Benefits provided to volunteer firefighters and emergency medical responders.
Sec. 104. Transition from deduction for qualified tuition and related expenses to increased income limitation on lifetime learning credit.
Sec. 105. Railroad track maintenance credit.
Sec. 106. Certain provisions related to beer, wine, and distilled spirits.
Sec. 107. Refunds in lieu of reduced rates for certain craft beverages produced outside the United States.
Sec. 108. Reduced rates not allowed for smuggled or illegally produced beer, wine, and spirits.
Sec. 109. Minimum processing requirements for reduced distilled spirits rates.
Sec. 110. Modification of single taxpayer rules.
Subtitle B—Certain Provisions Extended Through 2025
Sec. 111. Look-thru rule for related controlled foreign corporations.
Sec. 112. New markets tax credit.
Sec. 113. Work opportunity credit.
Sec. 114. Exclusion from gross income of discharge of qualified principal residence indebtedness.
Sec. 115. 7-year recovery period for motorsports entertainment complexes.
Sec. 116. Expensing rules for certain productions.
Sec. 117. Oil spill liability trust fund rate.
Sec. 118. Empowerment zone tax incentives.
Sec. 119. Employer credit for paid family and medical leave.
Sec. 120. Exclusion for certain employer payments of student loans.
Sec. 121. Extension of carbon oxide sequestration credit.
Subtitle C—Extension of Certain Other Provisions
Sec. 131. Credit for electricity produced from certain renewable resources.
Sec. 132. Extension and phaseout of energy credit.
Sec. 133. Treatment of mortgage insurance premiums as qualified residence interest.
Sec. 134. Credit for health insurance costs of eligible individuals.
Sec. 135. Indian employment credit.
Sec. 136. Mine rescue team training credit.
Sec. 137. Classification of certain race horses as 3-year property.
Sec. 138. Accelerated depreciation for business property on Indian reservations.
Sec. 139. American Samoa economic development credit.
Sec. 140. Second generation biofuel producer credit.
Sec. 141. Nonbusiness energy property.
Sec. 142. Qualified fuel cell motor vehicles.
Sec. 143. Alternative fuel refueling property credit.
Sec. 144. 2-wheeled plug-in electric vehicle credit.
Sec. 145. Production credit for Indian coal facilities.
Sec. 146. Energy efficient homes credit.
Sec. 147. Extension of excise tax credits relating to alternative fuels.
Sec. 148. Extension of residential energy-efficient property credit and inclusion of biomass fuel property expenditures.
Sec. 149. Black lung disability trust fund excise tax.
TITLE II—OTHER PROVISIONS
Sec. 201. Minimum low-income housing tax credit rate.
Sec. 202. Depreciation of certain residential rental property over 30-year period.
Sec. 203. Waste energy recovery property eligible for energy credit.
Sec. 204. Extension of energy credit for offshore wind facilities.
Sec. 205. Minimum rate of interest for certain determinations related to life insurance contracts.
Sec. 206. Clarifications and technical improvements to CARES Act employee retention credit.
Sec. 207. Extension and modification of employee retention and rehiring tax credit.
Sec. 208. Minimum age for distributions during working retirement.
Sec. 209. Temporary rule preventing partial plan termination.
Sec. 210. Temporary allowance of full deduction for business meals.
Sec. 211. Temporary special rule for determination of earned income.
Sec. 212. Certain charitable contributions deductible by non-itemizers.
Sec. 213. Modification of limitations on charitable contributions.
Sec. 214. Temporary special rules for health and dependent care flexible spending arrangements.
TITLE III—DISASTER TAX RELIEF
Sec. 301. Definitions.
Sec. 302. Special disaster-related rules for use of retirement funds.
Sec. 303. Employee retention credit for employers affected by qualified disasters.
Sec. 304. Other disaster-related tax relief provisions.
Sec. 305. Low-income housing tax credit.
Sec. 306. Treatment of certain possessions.
Remember there are 5,593 pages in this proposed legislation and we’ve only spent about an hour reading it. We do not have answers to everyone’s questions at this time.
This text has been shared courtesy of: David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (920-496-9111).
©2020 Ashwaubenon Tax Professionals. No reproduction of this article is permitted without the express written consent of Ashwaubenon Tax Professionals, 2140 Holmgren Way, Suite 1040, Green Bay, WI 54304.
