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On Dec 27, 2020, President Trump signed into law the fourth major COVID-19 stimulus package within the overall Consolidated Appropriations Act (Senate Amendment to H.R. 133) following the three pieces of legislation enacted in March (Coronavirus Preparedness and Supplemental Response Act, Families First Coronavirus Response Act, and CARES Act). Among other things, the newly-signed Act provides extensions to various federal credit programs and it modifies the CARES Act Employee Retention Tax credit.
The following federal credits that were slated to expire at the end of 2020 have been given five-year extensions through December 31, 2025.
In addition, the Act provides a two-year extension for the Energy Investment Tax Credit for solar for commercial buildings and residential energy-efficiency property tax credit. The effect of the Act is to extend the phase-out timeline for the credit for solar energy property as follows –
The following income tax credits were given a one year extension.
The CARES Act Employee Retention Credit against payroll taxes was extended and expanded.
Beginning on January 1, 2021, the Act will --
Retroactive changes to the CARES Act Employee Retention Credit are –
Application to taxpayers
The multi-year extensions of some of these credits provide certainty about their availability over the coming years instead of having been renewed annually or renewed retroactively after having been allowed to lapse. In the case of the solar credits, the Act permits more taxpayers to take advantage of the higher credit percentages by extending the phase-out period. The one-year extension of the Employee Retention Credit for Natural Disasters provides income tax credits for businesses affected by wildfires, hurricanes, and other natural disasters in Federal Emergency Management Agency (FEMA) declared disaster areas (non-COVID). The CARES Act Employee Retention Credit against payroll taxes was expanded to allow more employers to get immediate relief against their payroll tax obligations.
If you believe that these credits may apply, please contact one of the following HCVT state and local tax team members for assistance to evaluate how these changes may affect your client and to prepare any necessary forms.
Douglas Andersen | Partner | 562.216.5512 | firstname.lastname@example.org
Brett Johnson | Principal | 310.566.1971 | email@example.com
Nancy Chher | Principal | 562.216.1816 | firstname.lastname@example.org
Edvin Givargis | Senior Manager | 562.216.1816 | email@example.com
Elisa Reyes | Manager | 562.216.5500 | firstname.lastname@example.org
Goran Jovicic | Manager | 562.216.5539 | email@example.com