What’s Up in Washington, D.C.
Let the Games Begin!
Times have been anything but dull on the legislative front - proposals galore, stimulus talks, and a vote-a-rama round out a head-spinning week. Although President Biden had initially promoted a bipartisan effort for the next round of pandemic relief, things are now moving in a different direction, quickly.
A group of Republican lawmakers released framework for a $618B proposal as a counter to the President’s $1.9T “American Rescue Plan”. The Republican’s plan calls for smaller stimulus checks (as well as a lower income phase-out), less unemployment benefits and state/school funding, and omission of the $15 per hour proposed minimum wage appearing in Biden’s plan.
But the President has rejected this limited package and congressional Democrats are moving forward with a process called budget reconciliation to fast-track Biden’s more expansive plan without requiring Republican support. The December bipartisan stimulus bill took several months to finalize, but gave a March cut-off for important provisions such as expanded unemployment benefits, so many lawmakers are feeling pressure to enact measures to help struggling businesses and individuals now.
While budget reconciliation will only require a simple majority, rather than a 60-vote win in the Senate, a partisan approach is still wise with Democrat’s in control by a very slim margin. Dissent by even one Senate Democrat could cause trouble for a plan’s passage.
To draw out the process, Republicans prepared hundreds of budget amendments for consideration and potential passage during a “vote-a-rama”. Sounds like how judging a California surfing competition takes place, but in D.C. that term means a quick-fire Senate voting session addressing proposed amendments to the budget by the minority party.
The 15-hour marathon session lasted well into Friday morning, but ultimately the Senate passed the budget resolution 51-50, with Vice President Kamala Harris as the tie breaking vote. This means the budget reconciliation process moves forward, with the House up next to clear Senate changes to the budget. President Biden plans to meet with top House Democrats next to discuss what should be included in legislative text that will be drafted to bring the third stimulus bill to life.
Biden’s plan is on the forefront, but the package could be another vehicle for new proposals – and many were recently introduced! Modifications to Biden’s plan are likely to occur, as Democrats have already agreed to a more limited eligibility approach to stimulus checks. What the final bill looks like is still yet to be determined.
A change to the taxation of unemployment benefits was introduced to exclude the first $10,200 of 2020 unemployment income from a recipient’s gross income. Relief would be extended to federal unemployment programs including PUA, PEUC, and other traditional state provided unemployment.
In addition, over 100 lawmakers signed a letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer requesting a repeal of net operating loss provisions provided within the CARES Act. Specifically, they call for a reinstatement of TCJA’s §461(l) excess business loss limitations that suspend passthrough loss deductions in excess of $500,000, as well as limitations on loss carrybacks.
Senator Booker reintroduced a baby bonds bill that would give newborns $1,000 in a savings account, with more potentially deposited in future years depending on household income. His previous proposal did not garner much support, but may have more traction now.
The last proposal receiving attention is Senator Mitt Romney’s child allowance of up to $4,200 per year for children under age 6 and $3,000 per year for ages 6-17 paid out through the Social Security Administration, with income-based phase-outs. The plan may not have any real chance, however, with Republican Senators Marco Rubio and Mike Lee publicly opposing and instead calling for expansion of the existing Child Tax Credit.
And while coronavirus-related issues are top mind for lawmakers, three Senators reminded the public it’s not the only matter at hand. Senators Booker, Wyden, and Schumer issued a statement assuring a “unified discussion draft on comprehensive cannabis reform” will be coming yet this year.
Be sure to stay tuned for what makes it into the final stimulus bill and beyond!
PPP Apprisal
PPP FAQs were updated, but not by much! While the majority await updating to reflect changes made by the December stimulus bill, three new FAQs address financial reporting compliance with regard to Second Draw PPP loans, as well as discussing employee limitations for public broadcasting stations owned by colleges or universities that are newly eligible for the PPP.
SBA data through January 31, 2021 on the 2021 relaunch shows nearly 900,000 loans approved for over $72B in funds. That leaves roughly $212B on the table to be claimed by the March 31 due date.
But despite the program’s continued popularity and best efforts for a flawless PPP revival, problems exist. The AICPA sent a letter to the SBA regarding significant administrative troubles such as the SBA’s E-Tran system validation process and arbitrary loan caps. Clear communication is requested to resolve and reassure borrowers of the process and potential delays.
Guidance Drop
FAQs on the SBA’s Targeted EIDL Advances were released, but say don’t call me – I’ll call you. This program is an extension of the CAREES EIDL advance grant, but not just anyone can apply. Those who did not receive the full $10,000 advance grant will be invited by the SBA via email to apply for the difference between what was received and $10,000 in a first priority round. A second priority round will available for those who had applied for the original advance only to find funds were already depleted.
The Shuttered Venue Operators (SVO) Grant program is still not open, but the SBA is slowly ramping up guidance. A chart was added to their page showing how the SVO Grant interacts with the PPP and EIDL.
Thanks to the December stimulus bill, educators can include personal protective equipment costs paid or incurred after March 12, 2020 in their up to $250 above-the-line deduction of unreimbursed expenses. Rev. Proc. 2021-15 provides guidance on what PPE costs can be included.
Announcement 2021-2 notifies lenders who have filed a Form 1099-MISC reporting CARES Act section 1112(c) subsidized loan payments must file corrected forms that do not include these payments. The Consolidated Appropriations Act, 2021 retroactively provided such payments are excluded from borrowers’ gross income.
Phew! My goodness, are we having fun yet?! Stay tuned, it's going to continue to heat up on the legislative front I feel.
Have a great weekend!
Amie K
Information provided is for educational purposes and attempted humor (if any). Please consult your advisers.