Congressional relief updates
Here you will find updates on Coronavirus stimulus packages
The agency will also implement other tax elements of the rescue packages, including tax credits to keep workers on the payroll at struggling businesses and to help employers pay for sick and family leave. Industries affected by those provisions and others will work on shaping the rules and regulations to their liking.
Banks are now offering $350 billion in small-business loans this month as part of the $2 trillion economic rescue package. But the Paycheck Protection Program, which forgives the loans if a business maintains its payroll, got off to a rocky start as banks scrambled to process applications based on guidelines the Trump administration published just hours earlier. However, the demand for these funds is so high that the Administration has already sent a request to Congress asking for an additional $251 billion to guarantee that every business asking for funds will be able to get them. There are two competing proposals on the Hill: Republicans want to pass a bill that only addresses this funding request. Democrats want to add additional funding for hospitals, community health centers, and state and local governments. After a failed vote on both proposals on Thursday, the Administration and Republicans have stated that they are willing to negotiate a compromise with the Democrats.
The Financial Stability Oversight Council - an interagency body consisting of all the top regulators - is rolling out a plan to prevent mortgage servicers from going under amid the widespread suspension of payments by homeowners, with 2 million homeowners expected to be allowed to suspend mortgage payments by the beginning of May.
Colleges and universities are also anxious for their slice of more than $14 billion in direct aid from the coronavirus stimulus package as revenues decline, but they are still waiting to hear from the Education Department on how and when it plans to distribute the funding. The department said Saturday it would provide guidance "in the near future."
Agencies have released the following resources on key provisions of the CARES Act:
- IRS: Qualified Family Leave
- IRS: Employee Retention Credit
- SBA: Available Coronavirus Relief Options
- DOL: Employer Paid Leave Requirements
The Treasury has released the application that small businesses can use to apply for an SBA Paycheck Protection Program loan on March 31st in the evening.
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf More detail from the Treasury for borrowers:
More information on the application process
Information Provided by Lobbyit.com
- Any business concern that employs less than 500 employees (full and part-time); or if applicable, the size standard in number of employees established by the Administration for the industry in which the business concern operates.
- 501(c)(3) nonprofit organizations.
- Sole proprietors, independent contractors, and self-employed individuals.
- Payroll costs (defined below)
- Costs related to the continuation of group health care benefits AND insurance premiums
- Salaries, commissions, or similar compensations
- Interest on mortgage obligations (not to include any prepayment of said obligation nor any principal)
- Interest on any other debt obligations incurred prior to February 15, 2020
As mentioned above, these loans can be forgiven. Loan recipients can calculate the amount to be forgiven by calculating the sum total of the following “costs incurred and payments made” during the 8-week period beginning on the date of the covered loan origination:
- Payroll costs (defined below).
- Interest on mortgage obligation (which shall not include any prepayment of or payment of principal).
- Utility payments.
Payroll costs are defined as the sum of all payments for employees’:
- Salaries, wages, commissions, or similar compensation (up to $100,000 annual compensation as prorated for the covered period);
- Payment of cash tip or equivalent
- Vacation, parental, family medical, or sick leave;
- Severance payment;
- Health care benefits, including insurance premiums;
- Retirement benefits;
- State or local tax assessed on said compensation; and
- Payments of wages, commission, or similar compensation to any independent contractors that is $100,000 or less per year (as prorated for the covered period).
- Federal income tax and payroll tax contributions;
- Compensation of any employee whose principal residence is outside the US;
- Qualified sick and family leave wages covered by tax credits under the Families First Coronavirus Response Act.
- Borrower must have been in operation as of February 15, 2020, and
- Paid salaries and payroll taxes, or, paid independent contractors
- the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient;
- funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments;
- the eligible recipient does not have an application pending for an SBA economic injury disaster loan for the same purpose and duplicative of amounts applied for or received under a covered loan; and
- During the period beginning on February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts for an SBA economic injury disaster loan for the same purpose and duplicative of amounts applied for or received under a covered loan.
Level of Participation: A guaranteed SBA Paycheck Protection loan would cover 100% of a small business’ payroll costs through the covered period.
The Covered Period for the loans would retroactively start on February 15, 2020 and end on June 30, 2020.
Documentation requirements on independent contractors and sole proprietors and self-employed:
- Documentation that is necessary to establish eligibility, including payroll tax fillings, 1099 forms, and income and expenses documents and records.
- The average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date the loan is made, times 2.5.
- The outstanding amount of a loan made to the business concern by the SBA in February.
The outstanding amount on any other SBA loans that were made to an eligible recipient from January 31, 2020 until the enactment of the Paycheck Protection Program will be available to be refinanced under the new covered loan.
The fees normally applicable to SBA loans would be waived for the loans made under the Paycheck Protection Program.
Eligible entities need not prove to SBA that credit was sought elsewhere prior to applying for the new loans. This old SBA requirement is waived under this new loan program.
Eligible recipients of a covered loan under this program shall not be eligible to receive an economic injury disaster loan under the Small Business Act for the same purpose.
The CARES Act authorizes $349 billion to SBA for all loan programs from February 15, 2020 through June 30, 2020.
Employee Retention Credit
The bill includes a refundable tax credit for businesses to incentivize them to maintain idle workers on their payroll during the pandemic, if the business meets certain criteria. This credit is also available to all 501(c) non-profits.
If the employer has over 100 full-time employees, the credit is available for wages paid to employees when they weren’t providing services due to COVID-19 circumstances. However, for employers with 100 or fewer full-time employees, employee wages qualify whether the employer was open for business or closed due to COVID-19.
If a business opts to take advantage of this credit, they will not also be allowed to access the special SBA loans created in this legislation and discussed above.
Delay of Payment of Employer Payroll Taxes
The bill allows employers and self-employed individuals to defer payment of the employer share of Social Security tax. The employer must pay 50% of the deferred taxes by December 31, 2021 and the remaining deferred amounts by December 31, 2022.
QIP Deduction Fix
The 2017 Tax Cut and Jobs Act (TCJA) accidentally excluded “qualified improvement property (QIP)” i.e. interior renovations to a non-residential building, from a 100% first-year bonus depreciation for property placed in service between September 28, 2017, and December 31, 2022. The CARES Act fixes this by giving QIP a normal depreciation period of 15 as initially intended.
Net Operating Loss Carryback
The CARES Act further amended the business tax code by allowing businesses to take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. In addition, the NOL limit of 80 percent of taxable income is also suspended, which means that companies can use NOLs to fully offset their taxable income.
Net Interest Deduction Limitation
The net interest deduction limitation has been expanded to 50 percent of EBITDA for 2019 and 2020. This will help increase liquidity for some businesses almost immediately.
Changes to the Charitable Deduction
Starting with the 2020 taxable year, up to $300 in cash charitable contributions will be allowed as an above the line deduction.
For individuals who itemize the 50% of AGI limitation is suspended for 2020. For corporations the limitation increases to 25% of taxable income.
In the case of any charitable contribution of food during 2020, the limit is changed from 15% to 25%.
Expansion of Unemployment Insurance
The bill expands unemployment insurance eligibility to those who are not eligible for regular compensation or extended benefits under State or Federal law, or previously passed pandemic emergency unemployment compensation. To qualify, an individual must self-certify that s/he is otherwise able and available to work but cannot for one of the following reasons:
- Diagnosis of COVID-19 or is experiencing the systems and seeking a medical diagnosis
- Member of household has COVID-19
- Individual is providing care for a family member or member of household who has been diagnosed with COVID-19
- Child or other person in household for whom the individual is the primary caregiver is unable to attend school or other facility because of COVID-19 and such attendance is necessary for that individual to attend work
- Individual is unable to reach place of employment because of mandatory quarantine
- Individual has been advised by a medical professional to self-quarantine due to COVID-19 concerns
- Individual was scheduled to start a job and doesn’t have a job or unable to reach job due to COVID-19
- Individual has become the primary source of income or major support for household due to head of household dying due to COVID-19
- Individual has quit job as a direct result of COVID-19
- Place of business is closed due to COVID-19
- Individual is self-employed, is seeking part-time employment, doesn’t have sufficient work history, or otherwise doesn’t qualify for regular unemployment or extended benefits
This assistance is available beginning January 27th and goes until December 31st, 2020 with a 39-week maximum for an individual receiving assistance.
The bill also allows for states to waive their one week waiting period for unemployment benefits and the federal government will reimburse them for that week, thus incentivizing states to provide an immediate benefit.
Changes to Sick Leave and Family Leave Benefits
Paid Leave for Rehired Employees: The CARES Act amends the expanded paid leave requirements for employers in the “Round 2” Families First Coronavirus Response Act to include employees who are laid off and then rehired by an employer.
Specifically, an employee who was laid off by their employer on March 1, 2020 or later, had worked for the employer for at least 30 of the previous 60 days before being laid off, and was then rehired by the employer will be eligible for the paid family and sick leave benefits under the Round 2 legislation.
Assistance for Fishermen – The bill provides $300 million to help fishermen around the country struggling due to disappearing economic markets caused by the novel coronavirus pandemic. Tribal, subsistence, commercial, and charter fishermen, as well as aquaculture farmers, are all eligible for the disaster assistance.
Department of the Interior, Office of the Secretary – Provides $158.4 million in centralized, flexible resources to allow the Secretary of the Interior to allocate resources to address coronavirus response needs for national parks, wildlife refuges, and other public lands and other bureaus. Includes funding for equipment and supplies for cleaning buildings and public areas; support for law enforcement and emergency personnel deployed to critical areas; support for scientific needs; increased telework capacity; and other prevention, mitigation, or recovery activities associated with the coronavirus outbreak.
March 20th UpdateWe know that things are moving quickly, and we’ve drafted this summary to provide you with an update on what legislative action has taken place this week, summarize the latest developments, and preview what is going to happen next.
Summary of “Round 2” Enacted Legislation
On March 18th, the U.S. Senate passed H.R. 6201, the Families First Coronavirus Response Act, and President Trump signed it into law shortly after receiving the legislation from Congress. As you may already know, the bill is slightly different than first reported earlier in the week due to last-minute changes authored by the U.S. House of Representatives. In total, this “Round 2” response to coronavirus provides about $100 billion in relief to families and small businesses. The following is a brief update on the final provisions of the law.
Paid Sick Leave and Family Leave
The bill includes a 100 percent refundable tax credit to employers with regards to the following two categories of paid sick and family leave that employers must grant to employees under the bill to address employment interruptions related to COVID-19.
- Certain employers would be required to provide 80 hours (or 2 weeks) of fully paid leave to full-time employees (pro-rata rules would apply to part-time employees) on top of any other existing paid leave program of the employer to cover employees not working for the following uses:
- (1) the employee is subject to a Federal, State, or local quarantine or isolation order related to coronavirus;
- (2) the employee has been advised by health care provider to self-quarantine due to coronavirus;
- (3) the employee is experiencing symptoms of coronavirus;
- (4) the employee is caring for an individual who is subject to an order described in (1) or has been advised as described in (2);
- (5) the employee is caring for their child because the school is closed or their child care provider is unavailable due to coronavirus; or
- (6) the employee is experiencing a similar condition specified by the Secretary of HHS.
- Employers would be required to pay employees their full wages, not to exceed $511 per day and $5,110 in the aggregate, for a use described in (1), (2), or (3) above.
- Employers would be required to pay employees two-thirds of their wages, not to exceed $200 per day and $2,000 in the aggregate, for a use described in (4), (5), or (6) above.
- The requirement to provide the paid leave would apply to all public sector employers and those private-sector employers with less than 500 employees. The tax credit eligibility would only apply to those private-sector employers with less than 500 employees.
- The Secretary of Labor has authority to issue regulations to exempt small businesses with fewer than 50 employees if the above requirements would jeopardize the going concern of the business.
- Employers would be required to pay employees two-thirds of their wages, not to exceed $200 per day and $10,000 in the aggregate.
- The requirement to provide the paid leave would apply to all employers with less than 500 employees.
- The Secretary of Labor has authority to issue regulations to: (1) exclude certain health care providers and emergency responders from the definition of eligible employee; and (2) exempt small businesses with fewer than 50 employees if the above requirements would jeopardize the going concern of the business.
“Round 3” Proposed Stimulus Legislation
The Senate Republican leadership has released their version of a stimulus package. As of right now, Senate Republicans and Democrats are negotiating over the details of this package and hope to finalize an “agreement in principle” later today for an eventual vote.
House Democrats are also drafting their own Round 3 stimulus proposal, which they expect to introduce sometime early next week. In addition, the Trump Administration sent a $46 billion supplemental appropriations request to Congress for the ongoing Fiscal Year 2020. The request covers additional funding for various federal agencies as they adapt their operations to COVID-19.
We’ve summarized the key provisions of the Senate Republican stimulus package here.
Small Business Interruption Loans
Allows any business, private or public nonprofit with fewer than 500 employees to be eligible to receive Small Business loans. The maximum loan amount will be the lesser of -
- The amount obtained by multiplying -
- The average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the 1 year period before the date on which the loan is made; unless the applicant is a seasonal employer, the average total monthly payments for payroll shall be the period beginning March 1 – June 30, 2019; by
- 4; or
Additionally, qualifying small business loan funds used to maintain payroll continuity from March 1 – June 30, 2020 are eligible for forgiveness if they meet the guidelines.
Individual Provisions -
Individual Cash Rebates
Recovery checks of up to $1,200 will be put into the hands of most taxpayers, providing cash immediately to individuals and families. Married couples who file a joint return are eligible for up to $2,400. Those amounts increase by $500 for every child. These checks are reduced for higher-income taxpayers and begin phasing out after a single taxpayer has $75,000 in adjusted gross income and $150,000 for joint filers.
Tax Deadline Delay
Extends the April 15th filing date to July 15th. It will also allow all individuals to postpone estimated tax payments until October 15, 2020. This is designed to increase cash flow and there is no cap on the amount of estimated tax payments postponed.
Use of Retirement Funds
Waives the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for coronavirus-related purposes. Income attributable to such distributions would be subject to tax over three years and the taxpayer may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.
Charitable Contribution Deduction
The provision encourages Americans to contribute to churches and charitable organizations in 2020 by permitting them to deduct up to $300 of cash contributions, whether they itemize their deductions or not.
Modification of Charitable Contribution Limits
The provision increases the limitations on deductions for charitable contributions by individuals who itemize, as well as corporations. For individuals, the 50-percent of adjusted gross income limitation is suspended for 2020. For corporations, the 10-percent limitation is increased to 25 percent of taxable income. This provision also increases the limitation on deductions for contributions of food inventory from 15 percent to 25 percent.
Business Provisions -
Delay of Estimated Tax Payments for Corporations
The provision allows corporations to postpone estimated tax payments due after the date of enactment until October 15, 2020. There is no cap on the amount of tax payments postponed.
Delay of Payroll Taxes
The provision allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. All employers are responsible for paying a 6.2-percent Social Security tax on employee wages. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.
Modification for Net Operating Losses
The provision relaxes the limitations on a company’s use of losses from prior years. NOLs are currently subject to a taxable income limitation, and they cannot be carried back to reduce income in a prior tax year. This provision provides that a loss from 2018, 2019, or 2020 can be carried back five years. The provision also temporarily removes the taxable income limitation to allow an NOL to fully offset income. The provision also allows for NOL to be utilized by pass-through businesses and sole proprietors.
Modification to AMT Credits
The corporate AMT was repealed as part of the Tax Cuts and Jobs Act, but corporate AMT credits were made available as refundable credits over several years, ending in 2021. The provision accelerates the ability for companies to recover those AMT credits.
Modification of Limitation on Business Interest
The provision temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation to 50 percent of the taxable income for 2019 and 2020.
Fix Regarding Qualified Improvement Property
The provision enables businesses, especially in the hospitality industry, to immediately write off costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building.
Worker protections — Rules preventing corporations from getting government aid and then firing employees, cutting salaries or reducing benefits, as well as prohibitions on the money being used to buy back stock or reward executives.
Health care investment — “A massive infusion of resources” to “rebuild our health infrastructure on a continental scale,” including by pumping funding to hospitals and covering medical supplies like nasal swabs and protective masks.
‘Unemployment insurance on steroids’ — A “new form” of unemployment assistance that covers all workers, including those in the “gig economy,” like Uber drivers. That beefed-up compensation would come closer to fully paying workers’ lost wages and be “quick and easy” to come by.
More paid sick leave — Tracking with legislation, S. 3513 (116), introduced this week, Democrats want all employees and independent contractors to get 14 days of paid sick leave in the event of a public emergency and 12 weeks of paid family and medical leave, reimbursed in full by the federal government. They also want to permanently ensure workers can accrue seven paid sick days.
Student loan payoffs — Direct the Education Department to make monthly student loan payments on behalf of borrowers during emergency declarations. The administration would have to pay off at least $10,000 of a borrower’s debt, even if it means making extra payments after an emergency is over.
‘Bigger’ check to Americans — A “more generous and more frequent” cash infusion for Americans than the one-time payment of $1,000 that has been floated.
House Democrat Marker – Pelosi laid down a marker on what type of proposal they’re looking to pass
Unemployment insurance payments, expanded Medicaid coverage, an airline rescue package, relief for homeowners and renters, support for small businesses, and additional food security measures, according to Democratic lawmakers and aides
Their proposal won’t be formally finished until next week