CLICK HERE for the official text of the American Rescue Plan Act of 2021 which was passed by the House last week and signed by President Biden.
The text is posted at www.congress.gov, click on H.R. 1319, then on “Text,” and use the version titled, “Engrossed Amendment Senate.”
Based on this document, you can begin making plans for applying the updated version of the Employee Retention Credit (ERC), which is at Section 9651 of the bill.
IRS Notice 2021-20, which provides guidance on implementing ERC, applies to calendar 2020 only. IRS promises to issue guidance for ERC in 2021, but until it arrives, you can rely on the text of the American Rescue Plan Act.
The U.S. economy contracted 3.5 percent last year but is expected to grow 7 percent this year according to Goldman Sachs. Propelled by $2 trillion hoard of household savings, growing business investments, and government policy of assistance to states, firms, and tax cuts for low and middle-income financially-stressed households, under the American Rescue Plan Act (H.R. 1319).
There are still 10 million fewer workers than before the pandemic, and though the last unemployment report was promising, around 7.5 million workers are applying for unemployment each week and many are working fewer hours. The average workweek fell from 34.9 hours in January to 34.6 hours in February, equivalent to a payroll loss of a million workers according to Barron’s.
A March 8th analysis of the Senate bill by Urban Institute/Brookings Tax Policy Center found the measure “would reduce Federal taxes in 2021 by an average of $3,000 and raise after-tax incomes by 3.8 percent. Families with children would get an average tax cut of more than $6,000 . . .
“In 2021, low- and moderate-income households (those making $91,000 or less) would receive 70 percent of the tax benefits from the Senate measure. Among families with children, low- and middle-income households would get nearly three-quarters of the benefits. . . .
“A household making $25,000 or less would receive an average tax cut of $2,800, boosting their after-tax income 20 percent. A low-income household with children would get an average tax cut of nearly $7,700, raising their after-tax income by more than 35 percent.”
Overall, the Senate bill cuts taxes by $467 billion in 2021, according to the Joint Committee on Taxation, but the salient feature is “a 20 percent boost in after-tax income for the lowest-earning 20 percent of households,” with no hike in the minimum wage.
Beside boosts in appropriations for agriculture, energy, education, housing, transportation, health care, rural broadband, rental and mortgage assistance, etc., here are the highlights of the Senate bill for FY 2021 unless other dates are given:
Dear Chairmen Wyden and Neal, and Ranking Members Crapo and Brady:
The undersigned business groups strongly support the Main Street Tax Certainty Act of 2021, to make permanent the Section 199A 20-percent deduction for qualified business income.
Led by Representatives Jason Smith (MO) and Henry Cuellar (TX) in the House, and Senator Steve Daines (MT) in the Senate, this bipartisan legislation will help ensure permanent tax parity for the millions of employers organized as S corporations, partnerships and sole proprietorships. It will also provide certainty to the countless businesses who have been devastated by the coronavirus pandemic.
Individually- and family-owned businesses are the backbone of the American economy – they employ the majority of private-sector workers and represent 95 percent of all businesses. Despite the economic importance of the pass-through sector, however, Section 199A is scheduled to sunset at the end of 2025.
These businesses have been hard hit by the COVID pandemic and resulting shutdown policies. According to Yelp’s Local Economic Impact Report, a majority of businesses closed during the pandemic will not reopen, while small business revenues overall have declined by more than 30 percent in the past year.
Making the 199A deduction permanent will help millions of these pass-through businesses during this very difficult time, leading to higher economic growth and more employment. Analysis by economists Robert Barro and Jason Furman found that, among other provisions, making the pass-through deduction permanent would result in significantly increased economic growth in the coming years. The American Action Forum found similar results.
The sooner Congress acts to make Section 199A permanent, the sooner Main Street employers – and the broader economy – will benefit.
We appreciate your consideration of this important legislation.
Sincerely,
TIA and other trade associations
Last year, the U.S. House of Representatives passed the Protecting the Right to Organize (PRO) Act, on a nearly party line vote. Already this year the same bill has been reintroduced as H.R. 842.
Now, the Democratic leadership in the House plans to bypass the traditional committee process and bring this bill to a vote before the full House as soon as next week without a hearing!
This radical legislation is a smorgasbord of pro-Union legislation written to increase union membership at any cost, including attempts to implement policies that have been rejected by the judicial system, opposed on a bipartisan basis in Congress, and/or abandoned by the agencies asked to enforce them. Additionally, a companion bill, S. 420, has been introduced in the Senate.
Among other things, the PRO Act would:
TIA opposes this legislation.