MRPR Blog

Afflicted Business Relief Grant Applications Open March 1st

The State of Michigan will distribute up to $409 million of its American Rescue Plan Act fundsas grants to eligible businesses who have suffered financial hardship due to COVID-19. The Michigan Department of Treasury is administering this grant.

As the 2021 calendar year comes to a close, it’s important to keep your eyes open on tax changes so you can be prepared for the filing season. Here are some important planning tips:

1. Deduct Business Meals

The treatment of business meals and entertainment (either through a business entity or through an individual’s sole proprietorship) has changed significantly since the Tax Cuts and Jobs Act of 2017 (TCJA). Prior to that law, meals and entertainment expenses were generally deductible by the taxpayer at 50% of their cost in most cases. The TCJA changed this rule to completely disallow deductions for entertainment but keep the 50% limitation for business meals. However, as a COVID relief measure, the Consolidated Appropriations Act of 2021 (CAA) made a special exception for meals.

On Thursday March 11, 2021 President Biden signed the American Rescue Plan Act of 2021, H.R. 1319. This is the third major relief package to help Americans who are struggling with losses and setbacks from COVID-19 related government lockdowns and countermeasures.

Following the $1.7 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) of March 2020, and the $900 billion Consolidated Appropriations Act (CAA) of December 2020, the $1.9 trillion American Rescue Plan Act “the Act” provides several tax benefits for individuals and businesses alike.

On Saturday, January 9^th the Treasury and the SBA released new PPP guidance and application forms. The new guidance includes overviews of the First and Second PPP draws and the Revised PPP1-Borrower-Application-Form and Second-Draw-Borrower-Application-Form.

Christmas came early this year! As part of the Consolidated Appropriations Act of 2021, Congress has passed a stimulus package (“COVID-related Tax Relief Act of 2020”) that has provided a variety of useful provisions and clarifications for individual and business taxpayers alike. While not as comprehensive as the CARES Act passed earlier this year, it provides much-needed aid.

Under the Paycheck Protection Program (PPP), borrowers who received a PPP loan in excess of $2 million, whether from a single loan or the combined total (together with affiliates), have known for a while that their loans would receive increased attention from the Small Business Administration (SBA). To that end, the SBA Form 3509 must be submitted for loan amounts of $2 million or greater.

On November 30th, the MEDC announced that the Michigan Strategic Fund approved the funding of up to $10 million to assist small businesses disproportionately impacted by COVID -19. The “Pure Michigan Small Business Relief Initiative” will utilize Federal CARES Act monies to award up to $15,000 each to Michigan small businesses.

There has been considerable confusion regarding how expenses are to be treated for our clients who have received Paycheck Protection Program (PPP) loans, which are eligible for forgiveness under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The DOL has released additional Q&As, while updating others, in order to provide further guidance and clarification under the FFCRA as it relates to 1) schools back in session, and 2) New York court decisions regarding the Act. Being armed with the latest information will help make planning more productive and conversations more supportive within your organization.

The SBA released an Interim Final Rule for the Paycheck Protection Program (PPP) on August 24^th, 2020. The rule creates forgiveness limitations and/or clarification on limitations in three areas. The full IFR goes into full detail of the treatment of owners and forgiveness of certain non-payroll costs.

Here are the key highlights to help you stay updated.