At 5,593 pages long, the Consolidated Funds Act of 2021 (“the Act”) became the longest bill Congress ever passed last December. The law is a diverse law and affects a variety of different social classes.
Certain provisions of the Coronavirus Aid, Relief, and Economic Security Act, including paid sick and family vacation tax credits, employee retention tax credits, and the airline support program, have been changed and expanded by the law.
The Economic Aid to Hardly Affected 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 Paycheck Protection Program for Qualified Companies for which a law was in place quarterly gross revenue reduction of at least 25 percent compared to the same quarter last year), $ 15 billion grants to closed venue operators, and $ 20 billion grants for new loans to assist with catastrophic damage in the event of economic injury. The law also improved the federal tax ramifications for taxpayers related to these exemptions and enabled the deductibility of expenses paid on a loan from the paycheck protection program in place. In addition, income is non-taxable and expenses remain deductible for the SBA 7 (a) Debt Relief Program and Disaster Damage Assistance grants in the event of economic injury.
Clean energy and environment tax credits that have been amended and expanded by the law include section 179D, which permanently extends the deduction for energy efficient commercial buildings, section 45Q, the tax credit for capturing carbon dioxide by 2025, section 45 tax credit for generation renewable electricity for wind farms and other renewable energies will be extended to 2021, section 48 solar and other renewable energy investment credit will be extended by extending the maturity period and applying higher lending rates, section 40 second generation biofuel loan will be extended to 2021, section 25D residential energy – Efficient home loans will be extended at the full rate through 2022, excise tax credits and alternative fuel subsidy payments will be extended to 2021, and Section 45L energy efficient home loans will be extended to 2021.
Other tax enhancements include the Black Lung Disability Trust Fund excise tax on coal, which will be extended to 2021, the Oil Spill Liability Trust Fund excise tax on crude oil and imported petroleum products until 2025, the rail maintenance credit under Section 45G The extension will be made permanent and the loan rate will be reduced from 50 to 40 percent for tax years beginning after 2022. The screening rules for related controlled foreign companies will be extended to 2025. New Markets Tax Credit Is Extended To 2025, Opportunities Tax Credit Is Extended To 2025, Empowerment Zone Tax Incentives Are Extended To 2025, Section 45S Paid Family And Sick Leave Credit Is Extended To 2025, And Indian Employment Credit Is Extended To 2025 Extended in 2021.
Please contact your tax advisor to determine how the Consolidated Funds Act 2021 may affect your specific situation.
Joel A. Bock, CPA, MST, is a partner at Daniells Phillips Vaughan & Bock, a Bakersfield accounting firm.