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GOP ‘Skinny’ Relief Bill Lowers PPP Threshold, Lacks Tax Changes

Posted on Aug. 20, 2020

A trimmed-down relief package expected to be introduced by Senate Republicans would ease requirements to qualify for the Paycheck Protection Program, but it doesn’t have any notable tax provisions. 

The Delivering Immediate Relief to America’s Families, Schools and Small Businesses Act addresses many of the immediate priorities highlighted by Republican lawmakers, such as extending unemployment benefits, funding the U.S. Postal Service, and providing liability protection for businesses and healthcare professionals. 

The measure would also continue the popular PPP, which lapsed August 8, and would adopt many of the provisions found in a bill introduced by Sens. Marco Rubio, R-Fla., and Susan M. Collins, R-Maine, that was included in the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act.

But following pressure from business groups, the new legislation lowers the PPP threshold requiring a 50 percent year-over-year drop in quarterly receipts to 35 percent. Business groups showered lawmakers and the Trump administration with letters requesting that the PPP threshold be lowered to 20 percent, saying that many businesses on the brink of closure would be excluded if Congress maintained the 50 percent threshold. 

The National Restaurant Association said in an August 3 letter that a 20 percent year-over-year reduction in quarterly gross receipts would allow an additional 430,000 restaurants to qualify for another loan. 

The narrow bill unsurprisingly leaves out a provision to make some PPP-affiliated loans tax deductible. Despite bipartisan support, that language was also missing from the HEALS Act after the Trump administration applied pressure to leave it out. The IRS issued Notice 2020-32, 2020-21 IRB 837, in late April, which prevents PPP loan recipients from deducting some otherwise related expenses. Business groups have asked Congress to include in the next relief package language suggested by Senate Finance Committee member John Cornyn, R-Texas, that would overturn the IRS notice. 

No Tax Provisions, Stimulus Checks

The 169-page bill doesn’t include many of the tax provisions pitched by Republicans in the HEALS Act, such as an expansion of the employee retention tax credit or a deduction for business meals. 

The package also notably excludes economic stimulus payments of $1,200 to taxpayers making under $75,000. White House Chief of Staff Mark Meadows said he hopes that Democrats will consider passing some form of the Republican skinny bill when the House reconvenes August 22 to approve more funding for the Postal Service

Meadows mentioned that there is general bipartisan agreement on the PPP and the stimulus checks. Some Democrats have appealed to House Speaker Nancy Pelosi, D-Calif., to include some aid in the Postal Service funding measure. 

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