By: Abby Martinen
December 28, 2020
On December 21, 2020, the Senate passed a new emergency economic relief, government funding, and tax cuts package, known as the Consolidated Appropriations Act, 2021, to supplement the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, most of which expires at the end of the year. The Consolidated Appropriations Act was signed into law by the President on Sunday, December 27, 2020. This $900 billion relief package is the second largest emergency aid package in United States history, behind the CARES Act. Given the breadth and scope of this new relief package, much like the CARES Act, we will be issuing further client alerts in the coming days to describe specific details of the legislation and the legislation’s impact on different business sectors. In the meantime, the following is a brief overview of several key elements included in the new stimulus package.
Direct Payments to Citizens 
Single Americans will receive a direct payment in the amount of $600, couples will receive $1,200, and families will receive $600 for each child, with no cap on household size. These payments are subject to phase outs for individuals with adjusted gross incomes in excess of $75,000, with the payment phased out completely for those individuals with adjusted gross incomes greater than $99,000—these thresholds are doubled in the case of couples. Income limits and payment amounts are based on your 2019 incomes and tax returns. If you filed a 2019 tax return, are a social security recipient, or you uploaded your direct deposit information to the IRS for the previous stimulus payments, you will receive the new stimulus payment automatically.
There is a notable change in eligibility from the previous stimulus provided through the CARES Act: Payments will not be denied to citizens married to someone without a social security number. This allows spouses of undocumented immigrants to receive the stimulus benefit.
Tax relief provisions include extensions of a number of tax incentives, including, as examples, an individual’s ability to deduct medical expenses, excise tax relief to the craft beverage industry, extending the work opportunity tax credit for five additional years, and many more.
For Individuals: The CARES Act provided tax relief on a number of areas surrounding retirement accounts. The new stimulus package retroactively adds money purchase pension plans to the types of retirement plans that qualify for these temporary rules. Additionally, the increased limit on deductible charitable contributions from the CARES Act are extended for one year, through 2021. The bill also allows individuals to roll over unused health/dependent care flexible spending accounts (“FSA”) from 2020 to 2021 and from 2021 to 2022.
For Business and Employers: The Families First Coronavirus Response Act (“FFCRA”) paid sick leave and expanded Family and Medical Leave Act (“FMLA”) leave payroll tax credits are extended through March 31, 2021, but on a voluntary basis for employers. The FFCRA paid leave mandate is not extended, but employers may still voluntarily provide FFCRA leave benefits and remain eligible to take the tax credit for any such leave. Additionally, business expenses paid for with forgiven Paycheck Protection Program (“PPP”) loans are tax deductible. Finally, businesses and employers who have been deferring payroll taxes now have until the end of 2021 to increase an employee’s withholding in order to pay back those taxes owed.
The new stimulus bill provides $25 billion in emergency rental assistance and extends the eviction moratorium through January 31, 2021. Also, on December 21, 2020, the Department of Housing and Urban Development issued a similar moratorium that protects homeowners from foreclosure on home mortgages until February 28, 2021.
Loans for Businesses and Specific Industries
The new stimulus bill provides $45 billion in aid for transit agencies, airlines, airports, state departments of transportation, the motorcoach industry, and Amtrak.
It also provides a $15 billion grant program for theaters and live venues. These awards will be based on lost revenue: In the first 14 days of the program, theaters who lost 90% of their revenue will be able to apply, then in the next 14 days, theaters who lost 70% of their revenue can apply, and then any other eligible venue can apply after the first month of the program.
Small Business Loans
While the Paycheck Protection Program (“PPP”) stopped taking applications for small business loans in August, the new stimulus bill reopens the PPP loan program with $285 billion in aid. The bill allows businesses that did not previously receive PPP funding a chance to apply for a loan, and also allows businesses that previously received a PPP loan to obtain a second PPP loan if they meet certain criteria, including: (1) having less than 300 employees, (2) having at least 25% drop in revenue during any quarter of 2020 compared with the same quarter in 2019, and (3) having used or will have used the full amount of their first PPP loan. The maximum amount a borrower can receive under a second PPP loan is $2 million.
The stimulus bill also provides for $12 billion in PPP loans specifically for minority-owned business.
Publicly traded companies are ineligible to receive these PPP loans, but the bill provides eligibility for certain other first time PPP borrowers. These include businesses with 500 or less employees that are eligible for other SBA 7(a) loans; sole-proprietors, independent contractors, eligible self-employed people; not-for-profits, including churches; and specific accommodation/food service operations with fewer than 300 employees per physical location.
The new stimulus bill provides for an 11-week extension of unemployment benefits that were first provided in the CARES Act. First, anyone receiving unemployment benefits, whether through State Unemployment or Federal Unemployment, will receive an extra $300 per week on top of their weekly benefit amount through the Federal Pandemic Unemployment Assistance program (“FPUA”). This is similar to the Federal Pandemic Unemployment Compensation program (“FPUC”), that provided an extra $600 per week through the CARES Act.
Second, Pandemic Unemployment Assistance (“PUA”), federal unemployment for claimants who would normally not be eligible for state unemployment, and Pandemic Emergency Unemployment Compensation (“PEUC”), which provided an extension of benefits, both of which were set to expire on Dec. 26, 2020, are extended through March 14, 2021.
Lastly, the bill gives state departments of employment security the authority to waive overpayments where the claimant was not at fault in causing the overpayment.
Hospitals and Health Systems
The new stimulus bill provides $69 billion in aid for COVID-19 vaccine distribution, COVID-19 testing and contact tracing, and other health-care initiatives. The bill also implements a ban on most surprise medical bills, but such a ban will not begin until 2022.
The above list is not exhaustive. The stimulus package includes numerous provisions across a variety of areas including, for example, increases to certain welfare benefits, funding for K-12 schools and colleges, funding for broadband infrastructure, an expanded tax deduction for corporate meal expenses, and it extends the deadline for states to spend down the CARES Act relief funds by one year. The bill does not contain direct aid to state and local governments.
Please check our COVID-19 Resource Page regularly for more detailed information on the CARES Act, the new stimulus package, and other legislative and regulatory developments. The next Congress and the incoming Presidential Administration may consider further relief in early 2021 and we will provide updates if and when that happens.
 This amount may change as the U.S. House of Representatives is set to vote tonight, December 28, 2020, on whether to raise the direct payment from $600 to $2,000 per person. A similar measure failed on December 24, 2020, and, even if passed in the House, would still need to clear the Senate.