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COVID-19 Industry Insights 2021 Update: Construction

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This blog update will cover important statuses of local, state, and federal programs, taxes and restrictions currently affecting companies in the Construction Industry in the Pacific Northwest. To access all of our COVID-19 resources please visit our library online.

While we march through the first quarter of 2021, we find ourselves still submerged in the hectic reality that is life in a pandemic. As COVID-19 cases continue to persist, vaccines are rolled out to appropriate demographics, and state-by-state restrictions become more varied, the landscape is sure to shift often. We are monitoring legislation and industry updates to bring you the information needed to stay on top of important matters during this unprecedented era.  We recommend subscribing to our BP Blasts for the timeliest information, which you can do here.

Consolidated Appropriations Act

The most recent stimulus bill signed into law on December 27th 2020 is the Consolidated Appropriations Act. The stimulus contained in the Act builds upon CARES Act, with significant changes to the Employee Retention Credit (ERC) and Payroll Protection Program (PPP) of 2020.

Employee Retention Credit (ERC)

Under the CARES Act of 2020, those who took a PPP loan were not eligible for the ERC. This has changed. PPP 1.0 borrowers may now be eligible for the 2020 ERC retroactively. Additionally, the 2021 ERC credit includes expanded eligibility and increased limits on refundable payroll tax credits.  This is a major source of stimulus for qualifying construction companies. The application of the ERC is highly nuanced and unique to virtually every business, but BP is ready to assist in helping you determine the credits available under retroactive or 2021 ERC.

PPP 2nd Draw Loans

As most financial managers are aware, the second round of PPP loans authorized under the CAA have been underway.  To qualify for a second draw a company needed to have a single quarter in 2020 which experienced a decline in gross receipts of greater than 25% as compared to the same quarter in 2019.  The deadline to apply for a 2nd Draw PPP loan is fast approaching, and the SBA has not indicated any interest in extending the deadline of 3/31/2021 for the program. Some lenders are requiring 2nd draw loan applications be submitted well before the end of March.  It is also important to note that the program is currently only available to borrowers with fewer than 20 employees. These restrictions end on March 10th.

For important details on specific changes to the ERC and PPP click here.

Washington State Updates

Early in January 2021, Governor Jay Inslee issued the “Healthy Washington- Roadmap to Recovery” which moved the entirety of Washington State back to Phase 1 of reopening. The state has been split into 8 regions which individually transition from phase 1 to phase 2 as the regions meet case requirements. Requirements include a decrease in 14 day rates of new cases, hospital admissions, ICU capacity, and test positivity rates. The Puget Sound region is currently in phase 2 and there is hope for continuing improvement into the second quarter of 2021. For the state’s full “Healthy Washington-Roadmap to Recovery” last updated on February 14th, click here.

Roadmap to Recovery for Construction

Continuing to slow the spread of the virus means stressing personal responsibility for each of your employees. Employees should be encouraged to stay home if they have any symptoms of respiratory illness (i.e., fever, cough, shortness of breath). Maintaining appropriate social distancing, use of face coverings, and frequent hand washing all remain critical steps in the fight against the virus. For full details of jobsite best practices as outlined by the AGC of Washington last updated on January 26th, visit their helpful guide.

Incoming Administration

There is a new sheriff in town and rumors abound that we are staring-down the possibility of another round of tax reform for taxpayers in the U.S.  The roadmap to tax reform is murky at best as to timing or outcomes for the reform.  In short, there is no need to panic.  For more information on our thoughts on potential tax reform, please visit this BP Blast.

American Rescue Plan Act of 2021

Do you like stimulus?  If you do, we have good news, because more is coming!  The U.S. House of Representatives recently passed another $1.9 trillion COVID-19 relief package.  The bill appears to be focused less on business stimulus with the exception of hard-hit industries like hospitality and restaurants.  For a summary of the bill’s history and provisions, visit our recent BP Blast on the topic here.

Portland Continues to be Progressive

Do you like taxes? Do you have business operations in Portland?  If you do, we have good news, because Oregon is introducing new income taxes on business operations (and personal income tax increases) in certain counties and municipal areas. For a summary of the taxes being rolled out by the Portland Revenue Bureau, visit our BP Blast.

Seattle Payroll Expense Tax

If you were concerned that only Oregon was raising taxes on businesses, do not fret for Seattle is getting in on the act as well.  Seattle’s tax on payroll became effective on January 1, 2021. For a summary of the payroll tax and who it impacts, visit our BP Blast.