Consolidated Appropriations Act (CAA) of 2021
The CAA includes sections important to railroads, including permanence of the 45G short line tax credit, changes to the Emergency Paid Sick Leave Act (including Railroad Retirement Benefits) and Employee Retention Credit (ERC) provisions, first introduced in the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020.
The ERC is a fully refundable tax credit meant to encourage businesses affected by the COVID-19 pandemic to retain employees on their payroll.
Under the CAA, the ERC was extended through June, 2021 and the credit amount was increased to 70 percent of qualified wages, capped at $7,000 for each of the first two quarters of 2021. The law also changes employer eligibility, allowing those with gross receipts less than 80 percent of receipts in the same quarter in 2019 to qualify. Businesses with 500 employees or less are also eligible, up from the previous 100-employee threshold.
One of the most significant changes to the ERC is the ability of companies that received a Paycheck Protection Program (PPP) loan to now qualify for the ERC, which was prohibited in the CARES Act. However, a company cannot claim wages eligible for the ERC that were paid using a PPP loan that was forgiven. Eligibility is retroactive to March, 2020.
Finally, the CAA made changes to railroad retirement benefits. Of note, the sequestration order has been lifted until 30 days past the expiration of the Emergency Order related to COVID, the availability $600 per pay period/$300 per week for furloughed workers through March 14, and extension of maximum weeks paid from 39 to 50 weeks.
Also included in the CAA was permanency for the 45G short line tax credit, which ASLRRA applauded in a press release.
A helpful overview of the possible tax impact of these changes to businesses from ASLRRA member Bowers & Company is provided here.