Congress has passed a fourth COVID-19 relief bill and a comprehensive spending package to fund the government for the remainder of fiscal year (FY) 2021. These packages include many of AVMA’s top advocacy priorities, including fixing the unfavorable IRS tax treatment of expenses paid with Paycheck Protection Program (PPP) loans, streamlined PPP loan forgiveness for loans of up to $150,000, up to $20 million for animal health infrastructure’s role in the COVID-19 response, AVMA-led One Health report language, and funding for key federal programs important to veterinary medicine.
Leveraging the AVMA Ambassador program and the AVMA PAC, the AVMA Advocacy team aggressively lobbied the House and Senate to stress the importance of including the PPP tax fix and simplified loan forgiveness provisions in the final bill.
When they created the PPP program, Congress intended for recipients to be able to deduct the payroll costs and other expenses covered by forgiven loans, even though the loans themselves are tax-free income. The tax fix reverses the IRS ruling that denied the deductions and, depending upon where a veterinarian lives, will mean that up to 40% of the amount of a PPP loan stays within the veterinary practice instead of being paid in taxes.
The simplified loan forgiveness provision will establish a one-page, easy to complete form to apply for forgiveness of loans up to $150,000. Most veterinary practices will qualify for this simplified process, as 80% of the PPP loans obtained by veterinary practices meet this threshold.
“The AVMA’s tireless advocacy efforts have paid off for the veterinary profession,” said Dr. Kent McClure, AVMA’s chief government relations officer. “For the almost 60% of U.S. veterinary practices that took PPP loans, the tax fix will keep significant funds within the practices, and the simplified loan forgiveness application will make their lives easier. The AVMA-led, coordinated effort to obtain report language in the funding legislation will provide Congress with important information detailing existing collaborative efforts among FDA, USDA, and other agencies to prevent and respond to zoonotic disease outbreaks in animals and humans. This directive advances veterinary priorities and bolsters support for One Health legislation as we enter a new session of Congress.”
What’s in the COVID-19 relief legislation?
The legislation includes:
- Streamlined forgiveness applications for PPP loans up to $150,000
- Clarification that ordinary business expenses paid with PPP loans that are forgiven are fully deductible, which reverses an unfavorable IRS ruling
- $300 billion for the PPP
- Allowing second round of forgivable loans for small businesses that experienced a 25% quarterly revenue decline between 2019 and 2020
- Inclusion of 501(c)(6) organizations that have 300 employees or fewer, subjected to federal, state and local lobbying restrictions
- $20 million for animal health infrastructure to maintain and respond to animal disease prevention and response capacity that was diminished with the COVID-19 response
Other notable provisions in the legislation include an additional $300 per week of federal unemployment insurance until March 14, 2021, a second stimulus check of $600 for qualifying adults, $1200 for couples filing jointly, and $600 for dependents, rental assistance, funding to address COVID-related impacts on farmers, ranchers, and rural communities, and funding for education and vaccine testing.
Additionally, the bill extends the Employee Retention Tax Credit (ERTC) until June 30, 2021. The C4 legislation also increased the credit rate from 50% to 70% of qualified wages and increased the limit per-employee from $10,000 per year to $10,000 for each quarter. Paycheck Protection Program (PPP) borrowers may also still qualify for ERTC with respect to wages that are not paid for with forgiven PPP proceeds.
For details on federal stimulus programs available to the veterinary profession, visit AVMA’s COVID-19 resource center (avma.org/Coronavirus).
What does the government funding bill mean for the veterinary profession?
AVMA federal funding priorities were addressed in the FY 2021 funding bill passed by Congress:
- AVMA-led report language that will provide Congress with important information detailing existing collaboration among FDA, USDA, and other agencies to prevent and respond to zoonotic disease outbreaks in animals and people
- $500,000 increase ($8.5 million) for the Veterinary Medicine Loan Repayment Program (VMLRP); $3 million for the Veterinary Services Grant Program (VSGP); and $ 2.5 million for the Food Animal Residue Avoidance Databank (FARAD)
- $3.2 million increase for the Animal and Plant Health Inspection Service (APHIS) Center for Veterinary Biologics
- $1 million increase for Horse Protection Act enforcement and $350,000 increase Animal Welfare Act
- A funding increase for USDA research, including Agriculture and Food Research Initiative (AFRI) and the Foreign Animal Disease (FAD) research program at the soon-to-be-completed National Bio and Agro-Defense Facility (NBAF)
- Support for the continued establishment of the National Bio and Agro-Defense Facility (NBAF)
- $2.5 million for the Protecting Animals with Shelter (PAWS) program
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