On December 21, Congress passed a new Covid Relief Package. Although many HMA clients will turn out not to be eligible to apply for the second round of the Payment Protection Program (“PPP 2”), we thought that we should review some of the new details, as spelled out in an article published in the Journal of Accountancy of the AICPA (Association of International Certified Professional Accountants). Click Here
A few of the important components for HMA clients include:
- Applicants must be able to demonstrate a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019. As of this moment, we are unsure whether previous PPP and HHS funding is included in this calculation;
- To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks;
- As we have been awaiting, this new law creates a simplified forgiveness application process for loans of $150,000 or less which will hopefully, once published, make it easier to obtain forgiveness on the original loans; and
- The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible superseding recent IRS guidance. This provision applies to loans under both the original PPP and subsequent PPP loans. Remember, the original CARES Act excluded PPP loans forgiven from gross income.
Another important provision of this new law will be the enactment of “surprise billing” legislation. Although we have not seen that language as yet, we are told that it does include the arbitration provision, and also contains language prohibiting the arbiter from taking Medicare and Medicaid rates into account when determining a “fair market price.”
There will certainly be many more relevant details in both categories that we be identified in the days and weeks to come.
In the meantime, all of us at HMA wish all of you Happy Holidays and a Happy and Healthy New Year!