Trump Signs Federal COVID-19 Relief Act

Author: XpertHR Editorial Team

December 28, 2020

On December 27, President Trump signed the COVID-19 relief legislation Congress approved last week, which includes a $1.4 trillion government-funding package and $900 billion earmarked for COVID-19 aid. The Consolidated Appropriations Act, 2021 (H.R. 133) extends the availability of tax credits through March 31, 2021, for employers that continue to provide leave under the terms established by the Families First Coronavirus Response Act, in addition to a number of other takeaways for employers, including:

Expanded unemployment benefits. Under the Act, workers receiving unemployment benefits will receive an additional $300 per week through March 14, 2021. The Act also extends the Pandemic Emergency Unemployment Compensation (PEUC) and the Pandemic Unemployment Assistance (PUA) programs and provides an additional $100 per week for certain individuals earning both wage and self-employment income whose unemployment insurance benefit calculation does not consider self-employment when calculating the benefit amounts.

Paycheck Protection Program (PPP). Small businesses are eligible for a second PPP loan if they have less than 300 employees and can demonstrate at least a 25% revenue reduction. The Act also expands PPP eligibility to include 501(c)(6) nonprofits.

Flexible Spending Account (FSA) Benefits. Among other things, the Act provides additional relief for FSA benefits and allows employees to roll over any unused amounts in their health and dependent care accounts from the 2020 or 2021 plan years into the next plan year. It also allows employers to permit prospective mid-year election changes in FSA contribution amounts. These changes are optional and, if permitted, require amendments to plan documents.

Tax provisions. The Act extends the Employee Retention Tax Credit though June 30, 2021, and increases the credit rate from 50% to 70% of qualified wages. It also extends the repayment period for deferred payroll taxes until December 31, 2021, instead of April 30, 2021.

Other provisions of the Act of interest to employers include:

  • An extension of the Work Opportunity Tax Credit and expanded employer-provided student loan assistance, both through December 31, 2025;
  • A temporary rule preventing partial plan terminations for employers with defined contribution plans;
  • A measure to curb the practice of surprise medical billing; and
  • A temporary allowance for full deduction for business meal expenses.