WorldWide Drilling Resource

26 MAY 2021 WorldWide Drilling Resource ® Drilling Into Money Not Boring by Mark E. Battersby An Overview of the American Rescue Plan The American Rescue Plan (ARP) of 2021 is now a reality. The ARP’s provision on unemployment insurance continues to extend benefits for the self-employed and “gig” workers, along with those who have exhausted their regular jobless benefits, with a $300 weekly boost in jobless benefits into September. More importantly for many drilling operations, are provisions that include the following: j Small business financing program - Creators of the ARP hope to leverage $35 billion in government funds into $175 billion in additional small business lending and investment with an investment in state, local, tribal, and non- profit small business financing programs. j Already taking applications for second-round loans, the Paycheck Protection Program (PPP) gets an additional $7.25 bil- lion. Although just a small fraction of the amounts allocated in previous legislation, new rules allow more nonprofits to apply for loans designed to help borrowers meet their payroll and operating costs, and can potentially be forgiven. j The ARP earmarks $15 billion to the Emergency Injury Disaster Loan (EIDL) Program, which provides long-term, low-inter- est loans from the SBA. Severely impacted small businesses with fewer than ten workers will reportedly be given priority for some of these funds. j To encourage employers to keep workers on their payroll, last year’s CARES Act created the Employee Retention Credit (ERC). The ERC allows 70% (up from 50%) of a drilling business’s qualified wages to be immediately refundable via reduc- tions in employment tax deposits. j Paid sick and family leave - Last year, lawmakers guaranteed many workers quarantining because they contracted COVID-19, two weeks pay. They also provided an additional ten weeks of paid family leave to those staying home with chil- dren whose schools were closed. Although these benefits expired in December 2020, ARP will allow tax credits for wages voluntarily paid through October 1, 2021. And, no new law would be complete if it left out taxes. Consider the following business taxes: j Raising the top corporate tax rate to 28% from 21% and phasing out the 20% qualified business income deduction. j Imposing a minimum 15% tax on large corporations with over $100 million in profits, if deductions would otherwise allow them to pay less (much like the alternative minimum tax for individuals). These provisions and taxes are only a small part of the overall ARP. Obviously, professional guidance will be required to maximize the benefits a drilling company may wish to explore . Mark Mark E. Battersby may be contacted via e-mail to