COVID-19 Stimulus Package Update as of 3/20/20

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March 20th, 2020
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This update was prepared by AWFS’ advocacy agency LobbyIt and shared with all AWFS Member Primary contacts on Friday 3/20/20:

March 20th Update

We 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 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.

2. Employers would also generally be required to provide ten weeks of paid leave to employees who are not working because the employee is caring for their child because the school is closed or child care provider is unavailable due to a public health emergency.

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 –

1. 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
$10,000,000

Funds may be used for payroll support (paid sick, medical, family leave, etc..), employee salaries, mortgage payments, rent, utilities, and any other debt obligations

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.

Senate Democrats seek:

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