A bipartisan group of congressional lawmakers unveiled a $908 billion compromise Monday to restart negotiations on a coronavirus relief measure that includes several tax provisions, including a highly sought-after change making expenses paid for with federal loans tax deductible.
The new federal legislation would limit eligibility of PPP loans to businesses, with up to 300 workers, that have lost 30% of revenue in any quarter of 2020. (AP Photo/Patrick Semansky)
The Emergency Coronavirus Relief Act of 2020, introduced by Sen. Joe Manchin, D-W.Va., Sen. Susan Collins, R-Maine, and other so-called moderate legislators, would clarify the tax deductibility of business expenses paid for with loan proceeds from the Paycheck Protection Program.
The 525-page bill would modify relief provisions enacted in the $2.2 trillion
Coronavirus Aid, Relief and Economic Security Act 
, which was signed into law in March to combat a recession from COVID-19, the respiratory disease that has claimed more than 300,000 American lives and shuttered businesses across the nation.
"We strictly looked at everything that was going to expire at the end of this month. Now it's up to the leadership to take it and make this happen in a timely basis," Manchin said during a press conference called to announce the legislative package.
Under the PPP, federal loans could be made to small businesses that retain employees, but the money would not be paid back if it were spent on payroll and benefits, mortgage interest, rent, utilities and interest on other debts. However, recent
Internal Revenue Service guidance held that no tax deductions were permitted for covered expenses.
In addition to clarifying the deductibility issue, the new legislation would limit eligibility of PPP loans to businesses, with up to 300 workers, that have lost 30% of revenue in any quarter of 2020, according to a summary of the bill. Tax-exempt organizations — excluding those engaged in lobbying — that have fewer than 150 employees also would be eligible for PPP loans.
The legislation would also provide $25 billion in tax-free rental assistance to state and local governments and Native American tribes through the Coronavirus Relief Fund. It would also cut in half the 1.5% excise tax on private schools and colleges imposed by the 2017
Tax Cuts and Jobs Act .
The legislation would also provide a boost to the New Markets Tax Credit program, which is administered by the
Community Development Financial Institutions Fund, an agency of the
U.S. Department of the Treasury. The bill would provide up to $1 billion for grants to Community Development Financial Institutions to respond to the economic impact of the coronavirus pandemic.
--Editing by Tim Ruel.
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