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Congress Passes Covid Deal With Travel Supplier Aid, Meal Expense Deductibility

The U.S. House and Senate on Monday approved the $900 billion Covid-19 relief legislation, which would allow business travel suppliers access to a second round of federal loan programs to help weather the persistent virus-fueled demand drought. The bill requires President Donald Trump’s signature to take effect.

The Covid-19 relief programs are part of the federal 2021 Consolidated Appropriations Act, an omnibus spending bill. According to reports and several travel industry associations, provisions of the legislation not only include supplier support but also a move making all ordinary business meal expenses tax-deductible in 2021 and 2022.

Trump in March had suggested making more business meal costs tax-deductible, but no action on the matter took place before the latest legislation. The U.S. tax code long has allowed companies to deduct 50 percent of client and most types of employee meal costs from corporate taxes, but Trump’s 2017 tax reform added the specification that such a deduction only was allowed for meals that were not “lavish or extravagant.”

The legislation contains several supplier-relief provisions sought by the industry and its organizations, including:

• An extension of the Paycheck Protection Program, the program that allowed smaller supplies access to forgivable loans if they retained employees on their payrolls. According to the U.S. Travel Association, the latest $284 billion iteration of PPP allows employees with 300 employees or fewer and that saw revenue in any quarter in 2020 decline more than 25 percent year over year to access the forgivable loans, provided they spend at least 60 percent of it on payroll. Loans for most businesses would total up to 2.5 times total payroll, but are capped at $2 million. Hotels, however, could access 3.5 times total payroll.

• Allowable non-payroll expenses for PPP recipients have expanded and now include “supplier costs and investments in facility modifications and personal protective equipment to operate safely,” according to the American Society of Travel Advisors.

• Business expenses paid for with PPP loans also now will be tax-deductible, clarifying language in the original Coronavirus Aid, Relief, and Economic Security Act that sparked a dispute with the Internal Revenue Service.

• $15 billion in funding for the Treasury Department’s Payroll Support Program for airlines, allowing them access to loans to be used exclusively for payroll through March 31. Carriers also can use the loans to rehire workers laid off after the original PSP expired Sept. 30, 2020, according to U.S. Travel.

• $1.75 billion in grants to airports ” to prevent, prepare for or respond to Covid-19,” funds to be used exclusively for “costs related to operations, personnel, cleaning and debt service,” according to U.S. Travel.

• $1 billion for Amtrak to maintain service and prevent furloughs through March 31.

The legislation does not include protection from liability for companies that comply with Covid-19 health and safety regulations whose employees or customers contract the virus, a fact noted by Global Business Travel Association vice president of government and community relations Shane Downey.

“We can’t emphasize enough how desperately needed this funding is, or how much this action by Congress will add momentum to a global travel and economic resurgence,” Downey said in a statement. “With that said, we hope Congress soon will tackle necessary Covid-19 liability relief for companies at risk through no fault of their own.”

GBTA and other industry groups otherwise indicated they were pleased with the massage of the legislation but stressed the need for additional support in 2021.

“GBTA is pleased to see Congress pass a relief package that will save jobs, fast-track Covid-19 testing and vaccine distribution and aid travel companies on the precipice of bankruptcy,” Downey said.

“Thankfully, this package is widely considered a short-term ‘bridge’ into early 2021 and it is clear that the next Congress will take up additional relief legislation in the first quarter,” said ASTA president and CEO Zane Kerby in a statement. “Something is better than nothing, and we appreciate the breathing room this bill will afford the vast majority of our members. But the fight continues, and will until the travel agency sector is restored to health.”

American Hotel & Lodging association president and CEO Chip Rogers in a statement said the association “looks forward to working with Congress and the new Administration on a longer-term stimulus package that will ensure our industry survives and is well-positioned to help the country recover economically once the public health threat subsides.”

Said Airlines 4 America president and CEO Nicholas Calio in a statement, “Our employees are the backbone of the industry and our greatest resource, and carriers have been doing everything possible to protect their jobs. Now, as our nation looks toward recovery, it is more critical than ever to have our employees on the job and ready to assist.”

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