At a length of 5,593 pages, the Consolidated Appropriations Act, 2021 (“the Act”) became the longest bill ever passed by Congress this past December. A diverse piece of legislation, the Act impacts a multitude of different segments of society.
Certain provisions of the Coronavirus Aid, Relief, and Economic Security Act, including paid sick and family leave tax credits, the employee retention tax credit and the airline support program have been modified and extended by the Act.
The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (included as part of the Act) provides $284 billion in additional funding for the Paycheck Protection Program (including a Second Draw Paycheck Protection Program for qualifying businesses for which there was a quarterly gross receipts reduction of at least 25 percent as compared to the same quarter in 2019), $15 billion in grants to shuttered venue operators and $20 billion in new Economic Injury Disaster Loan Assistance grants. The Act has also improved the federal tax consequences to taxpayers associated with these relief provisions allowing for deductibility of expenses paid with a forgiven Paycheck Protection Program loan. Additionally, income is not taxable and expenses remain deductible for the SBA 7(a) debt relief program and the Economic Injury Disaster Loan Assistance grants.
Clean energy and environmental tax credits, which were modified and extended by the Act, include the section 179D energy efficient commercial building deduction is extended permanently, section 45Q carbon oxide sequestration credit is extended through 2025, section 45 renewable electricity production tax credit for wind farms and other renewables is extended through 2021, section 48 energy investment credit for solar and other renewables is extended by lengthening the phase-out period and applying higher credit rates, section 40 second-generation biofuel credit is extended through 2021, section 25D residential energy-efficient property credit is extended at the full rate through 2022, excise tax credits and subsidy payments for alternative fuels are extended through 2021 and section 45L energy efficient homes credit is extended through 2021.
Other tax provision extensions include the black lung disability trust fund excise tax imposed on coal is extended through 2021, the oil spill liability trust fund excise tax imposed on crude oil and imported petroleum products is extended through 2025, the section 45G railroad track maintenance credit is extended is being made permanent and the credit rate is reduced from 50 percent to 40 percent for tax years beginning after 2022, look-thru rules for related controlled foreign corporations are extended through 2025, the New Markets Tax Credit is extended through 2025, the Work Opportunity Tax Credit is extended through 2025, Empowerment Zone tax incentives are extended through 2025, the section 45S paid family and medical leave credit is extended through 2025 and the Indian employment credit is extended through 2021.
Please consult your tax advisor to determine how the Consolidated Appropriations Act, 2021 may impact your specific situation.
Joel A. Bock, CPA, MST, is a partner in Daniells Phillips Vaughan & Bock, a Bakersfield accounting firm.