For New Jersey and Pennsylvania-area businesses substantially affected by COVID-19, the Employee Retention Credit (ERC) has been a valuable incentive to keep employees on the payroll. Since it was introduced in March 2020 as part of the CARES Act, the ERC has undergone several modifications and extensions, including those made in the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act) and again in March 2021 under the American Rescue Plan Act.

The American Rescue Plan Act of 2021 (ARPA), signed into law on March 11, 2021, not only contained provisions that affected individuals, businesses, and governmental entities, but it also had implications for accountants in regards to Single Audits.  A Single Audit is an examination of an entity that spends $750,000 or more in governmental assistance per year, through funding such as grants and awards, to ensure that the funds are being spent properly and the entity complies with laws and regulations. 

On April 8, 2021, the IRS issued Notice 2021-25 in conjunction with the Taxpayer Certainty and Disaster Relief Act of 2020.  This Act grants a temporary exception to the 50% deduction limit for businesses on food and beverages provided by restaurants.

On March 31, 2021, the Biden Administration released an overview of The American Jobs Plan (Plan), which broadly outlines a proposed $2T modernization investment in the nation’s transportation, environmental and digital infrastructure and spread over eight fiscal years. The Plan includes fixing highways, upgrading ports, airports, and other transit centers. It calls for the modernization of public buildings, including federal facilities, upgrades to water delivery infrastructure, and revitalization of American manufacturing and innovation.

In New Jersey, nonprofit organizations that reach a specific threshold of the gross revenue received must comply with certain reporting requirements, including the mandatory submission of an audit conducted by an independent certified public accountant.

When the American Rescue Plan Act of 2021 was signed into law on March 11, 2021, it included a provision that allows taxpayers that earned less than $150,000 in modified adjusted gross income to exclude up to $10,200 of unemployment compensation claimed in 2020 on their 2020 individual tax returns (up to $20,400 for married couples filing jointly if both received benefits).

The challenges presented by a year-long struggle against the COVID-19 pandemic continue to persist for New Jersey and Pennsylvania-area individuals and businesses.

On March 12, 2021, President Biden signed the American Rescue Plan (ARP) Act of 2021. The fourth piece of COVID-19 relief legislation passed since the pandemic started, the ARP provides over $1.9T in relief for individuals, families, and businesses.

The fallout from the COVID-19 pandemic created by forced business closures and other government orders continues to challenge New Jersey businesses. Despite the drop in new cases, partially due to vaccination efforts, many have just started the journey back to profitability.

On March 17, 2021, the IRS announced that the federal individual tax filing due date would be extended. Below is a brief outline of the new federal tax filing due date and how the state governments in our area are responding.