Third Round of Stimulus Payments Begins

The IRS will begin processing the 3rd round of stimulus payments from the recently-executed American Rescue Plan Act as soon as possible. The following was announced by the IRS on March 12, 2021:

Following approval of the American Rescue Plan Act, the first batch of payments will be sent by direct deposit, which some recipients will start receiving as early as this weekend, and with more receiving this coming week.

Additional batches of payments will be sent in the coming weeks by direct deposit and through the mail as a check or debit card. The vast majority of these payments will be by direct deposit.

No action is needed by most taxpayers; the payments will be automatic and, in many cases, similar to how people received the first and second round of Economic Impact Payments in 2020. People can check the “Get My Payment” tool on on Monday to see the payment status of the third stimulus payment.

“Even though the tax season is in full swing, IRS employees again worked around the clock to quickly deliver help to millions of Americans struggling to cope with this historic pandemic,” said IRS Commissioner Chuck Rettig. “The payments will be delivered automatically to taxpayers even as the IRS continues delivering regular tax refunds. We urge people to visit for the latest details on the stimulus payments, other new tax law provisions and tax season updates.”

Highlights of the third round of Economic Impact Payments; IRS will automatically calculate amounts

In general, most people will get $1,400 for themselves and $1,400 for each of their qualifying dependents claimed on their tax return. As with the first two Economic Impact Payments in 2020, most Americans will receive their money without having to take any action. Some Americans may see the direct deposit payments as pending or as provisional payments in their accounts before the official payment date of March 17.

Because these payments are automatic for most eligible people, contacting either financial institutions or the IRS on payment timing will not speed up their arrival. Social Security and other federal beneficiaries will generally receive this third payment the same way as their regular benefits. A payment date for this group will be announced shortly.

The third round of Economic Impact Payments (EIP3) will be based on the taxpayer’s latest processed tax return from either 2020 or 2019. This includes anyone who successfully registered online at using the agency’s Non-Filers tool last year, or alternatively, submitted a special simplified tax return to the IRS. If the IRS has received and processed a taxpayer’s 2020 return, the agency will instead make the calculation based on that return.

In addition, the IRS will automatically send EIP3 to people who didn’t file a return but receive Social Security retirement, survivor or disability benefits (SSDI), Railroad Retirement benefits, Supplemental Security Income (SSI) or Veterans Affairs benefits. This is similar to the first and second rounds of Economic Impact Payments, often referred to as EIP1 and EIP2.

For those who received EIP1 or EIP2 but don’t receive a payment via direct deposit, they will generally receive a check or, in some instances, a prepaid debit card (referred to as an “EIP Card). A payment will not be added to an existing EIP card mailed for the first or second round of stimulus payments.

Under the new law, an EIP3 cannot be offset to pay various past-due federal debts or back taxes. 

The IRS reminds taxpayers that the income levels in this new round of stimulus payments have changed. This means that some people won’t be eligible for the third payment even if they received a first or second Economic Impact Payment or claimed a 2020 Recovery Rebate Credit. Payments will begin to be reduced for individuals making $75,000 or above in Adjusted Gross Income ($150,000 for married filing jointly.) The reduced payments end at $80,000 for individuals ($160,000); people above these levels are ineligible for a payment. More information is available on

New payments differ from earlier Economic Impact Payments

The third round of stimulus payments, those authorized by the 2021 American Rescue Plan Act, differs from the earlier payments in several respects:

  • The third stimulus payment will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four (married couple with two dependents) will get $5,600. 
  • Unlike the first two payments, the third stimulus payment is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents.

Additional information is available on

IRS Introduces Online Account System

The new system allows taxpayers to view certain individual account information including:

  • The amount you owe, updated for the current calendar day
  • Your balance details by year
  • Your payment history and any scheduled or pending payments
  • Key information from your most recent tax return
  • Payment plan details, if you have one
  • Digital copies of select notices from the IRS
  • Your Economic Impact Payments (EIP 1 and EIP 2), if any

You can also:

  • Make a payment online
  • See payment plan options and request a plan via Online Payment Agreement
  • Access your tax records via Get Transcript

This will be a great benefit to taxpayers, allowing them to circumvent the long call wait times to get the information they need quickly.

You can register for this account here.

Update: Consolidated Appropriations Act, 2021

Payroll Protection Program:
Round 2 of the Paycheck Protection Program is now available. It will be open through March 31, 2021.

A key difference in Round 2 and the original PPP offering is that firms must demonstrate a 25% reduction in revenue in 2020 from 2019 to qualify for the loan. This is accomplished by comparing any 2020 quarter’s revenue to the corresponding 2019 quarter. The basis of accounting is not relevant, but needs to be consistently applied between the comparing quarters.
A Round 2 borrower who received a PPP loan in 2020 also must have depleted the original PPP loan before applying for Round 2. A “Top Line Overview” of the program is available here.

Additional types of expenses paid for with Round 2 proceeds will qualify for forgiveness as well. Payroll, rent and utilities continue to qualify, but 2nd round funds can also be used for worker protection costs related to COVID 19, uninsured property damage cost caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

The same loan sizing methodology applies to this round of PPP, 2.5x average monthly payroll costs. The borrower can use either 2019 or 2020 payroll costs to calculate this average. In addition, any single borrower that is assigned a NAICS code of 72 (including restaurants and hotels) is eligible for a maximum loan of 3.5x average monthly payroll costs instead of 2.5x.

Other important provisions of this Act:
– Expenses paid with PPP proceeds are deductible as business expenses. The IRS had previously opined that these expenses would be non-deductible to the borrower.
– The Employee Retention Tax Credit has been extended and expanded. This credit was originally not available to PPP borrowers, it is now available to them. The credit is described here, the IRS will update this link in the future as further guidance is available on the mechanics of the extended and expanded credit.
– First-draw PPP loans under $150k now qualify for a simplified forgiveness application. Form 3508S is used for this purpose, although banks will likely offer their own versions of the form via their PPP portals.
– Business meals are 100% deductible in 2021 and 2022 if bought from a restaurant instead of subjecting those deductions to a 50% deduction limitation.
– The 10% penalty on pre-59 1/2 retirement plan payouts is waived as long as the distribution is under $100k.

Identity Protection PINs Will Be Available to All Taxpayers in 2021

The IRS announced that all taxpayers will be able to opt in to using an Identity Protection PIN (IP PIN) in 2021 on Wednesday. A new IRS tool will be available online to create IP PINs on their website in January 2021. Each IP PIN is valid for one tax year only. The IRS announcement can be read here. We encourage taxpayers to use this option to help combat identity theft.

PPP Forgiveness Simplification

A new simplified forgiveness application was provided today by the U.S. Treasury and the SBA. To use the new simplified form to apply for forgiveness, borrower’s loans must be $50,000 or less. Under the Interim Final Rule (IFR), qualifying PPP borrowers are exempted from any reductions in forgiveness based on:

  • Reductions in full-time-equivalent (FTE) employees; and
  • Reductions in employee salary or wages.

The new form can be found here, and instructions here.

What To Expect If Your PPP Loan Is Audited

The SBA is expected to audit PPP loans, covering everything from eligibility to the forgiveness calculations.
This article provides background on what to expect if your PPP loan is selected for review.