Wenstrup, Harris to Lead Doc Caucus

Reps. Brad Wenstrup (R-Ohio) and Andy Harris (R-Md.) have been selected to lead the House GOP Doctors Caucus during the 117th Congress. The two lawmakers will succeed Rep. Phil Roe (R-Tenn.), who retired from Congress this year. Dr. Wenstrup is a Doctor of Podiatric Medicine, and Dr. Harris is an anesthesiologist.

Biden to Release All Available Vaccine Doses

President-elect Joe Biden announced to plans to release nearly all available vaccine doses upon his inauguration. Because both COVID-19 vaccines that have received an emergency use authorization (EUA) require two doses, the current administration has been holding approximately half of its supply in reserve to ensure that those who have received their first dose are able to complete the two-shot sequence. But vaccine distribution and administration has faced missteps nationwide with vaccination rates varying widely across states. Only 5.9 million people have received their first dose so far, out of the 21.4 million doses that have been shipped out by the federal government. The Biden administration will retain Moncef Slaoui, chief scientific adviser to Operation Warp Speed (OWS), as a temporary consultant for a period of four to six weeks to ensure continuity of work on vaccine rollout. OWS’s chief operating officer Gen. Gustave Perna will also continue in his role controlling the logistics of vaccine distribution.

Woodcock to Serve as Advisor to FDA Commissioner

Former Director of the Food and Drug Administration’s (FDA) Center for Drug Evaluation and Research (CDER) Janet Woodcock, M.D. is now the principal medical advisor to FDA Commissioner Stephen Hahn. Woodcock had stepped aside from her role at CDER earlier this year to join Operation Warp Speed (OWS). She will retain her role at OWS and recuse herself from decision-making on COVID-19 therapeutics. Patrizia Cavazzoni, M.D. will continue as Acting Director of CDER.

PHE Declaration Extended

As a result of the continued COVID-19 pandemic, U.S. Department of Health and Human Services (HHS) Secretary Alex Azar renewed the public health emergency (PHE) declaration effective January 21, 2021. The renewal lasts for the duration of the emergency or 90 days, and may be extended again by the Secretary. The nationwide PHE was first declared on January 27, 2020.

SBA/IRS Release Regulations and Guidance Related to the PPP

The Economic Aid Act enacted at the end of 2020 as part of the Consolidated Appropriations Act, 2021 established “Second Draw” Paycheck Protection Program (PPP) loans for certain eligible borrowers and made other changes to the underlying program. On Wednesday January 6, 2021, the Small Business Administration (SBA) and the Department of Treasury issued final rules and guidance implementing the new law (links below). Per a recent announcement, these loans will be made available starting this week.

Despite controversy over this issue last year, the new law and subsequent implementing documents establish that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. That particular provision is effective retroactively, as of the date of enactment of the CARES Act. The provision provides similar treatment for Second Draw PPP loans, effective for tax years ending after the date of enactment of the provision.

The PPP program is extended through March 31, 2021, after which time loans will be unavailable. As with the first round, the loans will be made on a first come, first serve basis. Note that the PPP is also open again to first-time eligible borrowers (including newly eligible borrowers) in addition to second draw applicants. The new law allows for certain 501(c)(6) organizations to receive PPP loans. Specifically, 501(c)(6) entities are eligible, provided that not more than 15% of receipts come from lobbying activities; lobbying activities are not more than 15% of total activities; the cost of lobbying did not exceed $1 million during most recent tax year ending before February 15, 2020; and the entity had less than 300 employees. With some exceptions as outlined herein, the mechanics of first and second loans are identical.

To be eligible for a PPP second draw loan, an employer must have used, or will use, the full amount of the initial PPP loan, have no more than 300 employees (500 if more than one location), and demonstrate at least a 25% reduction in gross receipts as compared to the same quarter in 2019 (with caveats for new businesses). Any forgiveness amount of a First Draw PPP Loan that a borrower received in calendar year 2020 is excluded from a borrower’s gross receipts. A borrower can provide annual tax return forms to substantiate its revenue reduction. The maximum loan amount (except for certain entities in the hospitality industry) is the lesser of: $2 million or 2.5 times the average monthly payroll during 2019 or during one-year period before the loan date, whichever the borrower chooses.

For Second Draw PPP Loans, the number of employees per physical location is limited to 300 rather than 500 for most borrowers. With some exceptions, the same affiliation rules apply. Businesses that are part of a single corporate group shall in no event receive more than $4 million of Second Draw PPP Loans in the aggregate.

If your First Draw PPP loan is under review by SBA or information in SBA’s possession indicates that the borrower may have been ineligible for the First Draw PPP Loan, the lender will receive notification from SBA when the lender submits an application for a guaranty of a Second Draw PPP Loan and will not receive an SBA loan number until the issue related to your First Draw PPP Loan is resolved.

The applicant must submit to the lender SBA Form 2483-SD (Paycheck Protection Program Second Draw Borrower Application Form, which is forthcoming) or the lender’s equivalent form including the required certifications. Documentation requirements are described in the Interim Final Rules (IFRs).

Wednesday’s IFRs and guidance documents can be accessed via the following links:

HHS Finalizes Regulatory Review Rule

The U.S. Department of Health and Human Services (HHS) has finalized its Securing Updated and Necessary Statutory Evaluations Timely (SUNSET) rule which requires an assessment of HHS regulations every 10 years to determine whether they are subject to review under the Regulatory Flexibility Act (RFA), which requires regular review of significant regulations. If a given regulation is subject to the RFA, the Department must review the regulation every ten years to determine whether the regulation is still needed and whether it is having the appropriate impacts. Regulations will expire if the Department does not assess and, if required, review them in a timely manner.

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