President Biden signed a massive piece of COVID-19 relief legislation on Thursday, March 11, with benefits totaling approximately $1.9 trillion dollars. The bill, named the American Rescue Plan Act (ARPA), provides the well-publicized $1,400 for many Americans. The bill also continues expanded unemployment benefits and an expansion of the Paycheck Protection Program (“PPP”), while providing significant funding for eviction and foreclosure protection, childcare, and restaurants that have been hard hit by the COVID-19 pandemic.

This article is just a summary of a portion of the subject matters of ARPA. Also, various aspects of the subject matters that are included have details that did not make it into this article. For example, the tax impacts of participating in certain programs, or coordination between programs such as the PPP and sick leave provisions are not included.

Stimulus Payments

ARPA provides payments of $1,400 per individual to individuals with annual income less than $75,000. Individuals with annual income between $75,000 and $80,000 will receive a proportionately lower amount, and those with annual income $80,000 and above will see no benefit. Similarly, joint filers with annual income up to $150,000 will receive the full payment ($1,400 per person), decreasing proportionally until zeroing out for joint filers with income at $160,000 or more. Head-of-household filers with annual income of $112,500 will receive the full benefit, with reduced benefit until zeroing out for head-of-household filers bringing in $120,000 or more. Taxpayers with dependents will get $1,400 per dependent as well, with the same income limitations.

Payment eligibility will be based off of an individual’s 2019 tax return unless they already filed a 2020 return.

Child Care

ARPA provides funding for childcare programs, as well as expanding the child tax credit. The bill makes available almost $15 billion for states to use to provide childcare assistance to health care sector workers, emergency responders, sanitation workers, and other “essential” workers. Another almost $24 billion is allotted for states to use for childcare providers that waive payment or tuition for enrolled families if they prioritize waiver of funding for families struggling to make such tuition payments.

ARPA increases the child tax credit to $3,600 for children below age 6, and $3,000 for children aged 6 to 17, which increased the age limit from 16 years of age. This benefit reduces by $50 for each $1,000 earned above $75,000 for individual filers, $150,000 for joint filers, and $112,500 for head-of-household filers. The bill also calls for establishment of a program that makes periodic payments of this tax to eligible taxpayers, so they do not need to wait until next April to receive this benefit.

Unemployment Under the CARES Act 

The CARES Act, passed in the Spring of 2020, and summarized by KEW, expanded eligibility for unemployment payments by creating the Pandemic Unemployment Assistance (“PUA”) program, providing additional weeks of unemployment insurance under the Pandemic Emergency Unemployment Compensation (“PEUC”) program, and created an additional $600 weekly payment for unemployment recipients with the Federal Pandemic Unemployment Compensation (“FPUC”) program.  In legislation passed in December 2020 (the “Consolidated Appropriations Act of 2021” or “CAA of 2021”) (our write up here), these programs were extended into March with the FPUC payment reduced from $600 weekly to $300 weekly. The new legislation continues the PUA, PEUC, and FPUC programs through September 6, 2021, with the FPUC payment continuing at $300 per week.

Sick Leave Under the FFCRA

Similarly, Congress also passed the Families First Coronavirus Response Act (“FFCRA”) in Spring of 2020 (KEW summary here). That bill extended eligibility for Emergency Paid Sick Leave (“EPSL”) and Emergency FMLA (“EFMLA”) in response to COVID-19.

As explained in KEW’s review of FFCRA, EPSL and EFMLA were mandatory paid sick leaves through which employers could seek reimbursement through a payroll tax credit. In December 2020, CAA of 2021 continued both EPSL, but made employer participation voluntary through March 31, 2021. In other words, employers chose to participate and continue to receive reimbursements through payroll tax credits (KEW’s review of the CAA of 2021).

ARPA continues this voluntary program through September 30, 2021 for leave beginning after March 31, 2021.

Key changes from FFRCA and CAA of 2021

  • ARPA provides a re-set of the FFRCA 80-hour/10-week limits after March 31. In other words, an employee that maxed out the use of EPSL and/or EFMLA has a fresh slate to use either or both beginning April 1, 2021.
  • ARPA provides additional reasons a person can take EPSL:
    • (1) An employee is waiting on the results for a COVID-19 test or diagnosis and has been exposed to COVID-19 or the employer has requested such test;
    • (2) An employee is taking leave to obtain the COVID-19 vaccine, or
    • (3) An employee is recovering from side effects of getting the vaccine.
  • ARPA increases the total tax credit wage cap per qualified employee to $12,000 from a previous cap of $10,000.
  • ARPA disallows credits for employers who discriminate in favor of highly compensated employees, full-time employees, or longer-tenured employees. In other words, if employers offer it to some employees, they must offer it to all. But, employers can choose to offer one benefit and not the other.

Housing/Rental Aid

ARPA makes more than $21 billion dollars available to the states for rental aid. States are supposed to receive at least 40% of their total allocation within 60 days of the bill passing into law. Funds can be used to pay up to 18 months of rent, back rent, utilities, and other expenses related to housing. The bill also makes $5 billion available for emergency housing vouchers or individuals who are homeless, at risk of homelessness, or fleeing domestic violence or human trafficking.

Homeowners also see some relief under this bill. Almost $10 billion will be set aside to help eligible homeowners with mortgage payments, facilitating principal or interest rate reduction, utilities, and insurance. These funds will be distributed to the States for further disbursement as well.

Small Business Aid

ARPA also appropriates more than $7 billion for the PPP and $15 billion for the Economic Injury Disaster Loan (“EIDL”) program. Additional nonprofits are now eligible for PPP loans. Any 501(c) organization besides a 501(c)(3), (c)(4), (c)(6), and (c)(19) entity is eligible if they do not receive more than 15% of its receipts from lobbying activity, lobbying does not comprise more than 15% of the organization’s total activities, the cost of lobbying activities does not exceed $1 million in the last tax year, and the entity has no more than 300 employees. Some larger nonprofits are also eligible if they do not have more than 500 employees in a single location.

ARPA makes more than $28 billion available for restaurants, foot trucks/stands/carts, caterers, taverns, bars, pubs, etc., with less than 20 locations that suffered losses during 2020. Those eligible can use the money to offset losses incurred as a direct result of, or during, the COVID-19 pandemic that are payroll costs, payments of principal or interest on mortgages, rent, utilities, food and beverage, supplies and supplier costs, sick leave, and operational expenses and maintenance. It appears that restaurants that have not yet opened at all are eligible for some of the benefit as well.

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