Over the weekend, Congress settled on a new $900 billion COVID-19 relief package to follow-up the original CARES Act that was passed back on March 25. Congress voted on and passed the package late Monday night. It now heads to President Trump’s desk to be signed into law.
The new stimulus package includes a number of benefits:
- One-time stimulus payments of $600 for individuals earning up to $75,000. Payments would be less for those making over $75,000.
- Additional unemployment benefits of $300 per week through mid-March.
- Additional funding for rental and SNAP assistance.
- Additional funding for vaccines, schools, and testing.
- $20 billion in grants target at businesses in low-income communities through the Economic Injury Disaster Loan program, which is a part of the Small Business Administration (SBA).
The legislation also includes an additional $284 billion for the Paycheck Protection Program (PPP). The funding will be available for both businesses who received PPP funds last time, and also for those who did not receive anything the first time around. For those who previously received PPP funds, they will have to prove that they have less than 300 employees and that their revenue fell by 25%. Funds for second-time applicants will be capped at $2 million.
The new PPP funding in the package also reverses an IRS ruling from earlier this year and adds tax deductibility for PPP expenses.
Back in October, the SBA made it easier for businesses with PPP loans of $50,000 or less to apply for forgiveness by creating a simpler loan forgiveness application. In this new legislation, that benchmark is bumped up to $150,000.
It also seems that the struggles of the hospitality industry are being targeted in the package. In a joint statement issued by Nancy Pelosi and Chuck Schumer on the new relief package, it was said that, “[There are] key modifications to PPP to serve the smallest businesses and struggling non-profits and better assist independent restaurants.”
In addition, the bill also makes the federal excise tax reduction for craft distillers introduced in the Craft Beverage Modernization and Tax Reform Act (CBMTRA) permanent.
The CBMTRA includes reforms enacted in 2017 that create a fair and equitable tax structure for brewers, winemakers, distillers, and importers of all beverage alcohol. Under CBMTRA, distillers pay a reduced excise tax rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits (most craft distillers fall into this category); a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits; and a rate of $13.50 per proof gallon for production in excess of 22,230,000 proof gallons. The tax reduction was renewed for one year in 2019 and was set to expire on Dec. 31, 2020. This legislation makes it permanent.
“I can guarantee you that across the country craft distillers and their employees will be raising a glass of their finest spirits this evening and toasting their legislators for supporting struggling craft distilleries in need of economic relief,” said Distilled Spirits Council President & CEO Chris Swonger. “By making the reduced tax rates permanent for small distillers, Congress is protecting jobs, boosting communities, and helping to get these businesses back on a path of stability and growth. We look forward to the president swiftly signing this package into law.”