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On March 11, Congress instituted the latest Coronavirus (COVID-19) relief fund, the American Rescue Plan Act of 2021. This plan includes a total of $6 trillion in economic relief. Many plan provisions provide aid if certain criteria are met, such as extended unemployment insurance benefits and continued financial support for small businesses and restaurants.

Updates to Employee Retention Credit (ERC)

The ERC was initially passed in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and allowed employers to claim a payroll tax credit of 50% on employee qualified wages from March 13 – December 31, 2020. Wages include the employer portion of group healthcare costs to the employee. The ERC has also augmented relief for businesses up to $10,000 of wages per employee per quarter.

The ERC has added relief for new businesses that began operations as of February 2020 up to $50,000 per quarter in the updated plan. The ERC credit was extended for wages paid by January 1, 2022. It is important to note that you cannot double-dip ERC wages and PPP wages.

 

Paycheck Protection Program (PPP)

Additional appropriations and targeting grants were created to cover entities that have suffered economic losses of greater than 25% of gross receipts and employ not more than 300 employees.

 

Premium Tax Credit

The American Rescue Plan Act expands upon the existing premium tax credit for 2021 and 2022. The applicable percentage amounts have been updated. Taxpayers might not have to repay the excess amount if they received too much in advance premium tax credits in 2020. A special rule was added that treats taxpayers who received or have been approved to receive unemployment compensation for any week during 2021 as qualified for the tax credit.

 

Small Business Relief Aid

Through the American Rescue Plan Act, the Paycheck Protection Program has received an additional $7.25 billion. There was also a “Restaurant Revitalization Fund” established, totaling $28.6 billion. This effort will provide aid to restaurants, caterers, and other food establishments with less than 20 locations.

The act temporarily delays the designation of multiemployer pension plans as in endangered, critical, or critical and declining status. It makes other changes for multiemployer plans in critical or endangered status.

 

For a deeper understanding of how this new assistance plan will impact you, please contact the CDH Tax team at [email protected].