What's in the "Coronavirus Aid, Relief, and Economic Security Act?"
The Senate FINALLY passed the 883-page bill designed to put cash back into the hands of the American people and their distressed employers. Yesterday, President Trump announced his intent to sign draft H.R. 748 (116) entitled “Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act” into law immediately.
The CARES Act includes far more than payments to just the unemployed and distressed businesses. Here is a brief snapshot of what’s included:
MONEY FOR THE PEOPLE
1. Advanced Tax Credit Payments for Citizens: “recovery rebates” —advance refunds of a 2020 tax credit. Individuals will receive a tax credit of $1,200 ($2,400 for joint filers) plus $500 for each qualifying child. The credit is phased out for taxpayers with adjusted gross income (AGI) above $150,000 (for joint filers), $112,500 (for heads of household), and $75,000 for other individuals. Taxpayers will reduce the amount of the credit available on their 2020 tax return by the amount of the advance refund payment they receive. This is the government providing an interest free loan against your (anticipated) 2020 income tax refund. A more detailed explanation can be found here.
2. Charitable deductions: The bill creates an above-the-line charitable deduction for 2020 (not to exceed $300).
3. Employee retention credit: The bill creates an employee retention credit for employers that close due to the coronavirus pandemic. Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee. For employers with 100 or fewer employees, all wages paid qualify for the credit.
4. Retirement plans: Taxpayers can take up to $100,000 in coronavirus-related distributions from retirement plans without the traditional early-withdrawal penalties. This benefit expires after December 31, 2020 and the distributions must be repaid within 3 years.
5. ALSO: delayed payment of 50% of employer payroll taxes for the year 2020 and the 80% income limitation for net operating loss deductions is temporarily repealed.
Earmarked funding for federal, state, local, tribal, and private organizations (not all are listed below):
- $1.5B for Economic Development Assistance Programs administered by the Department of Commerce to address economic injuries caused by the coronavirus.
- $80M for the FDA for salaries and expenses to respond to the coronavirus, including the development and approval of vaccines and treatments.
- $8.8B for Child Nutrition Programs and $15.81B for SNAP assistance.
- $850M For State and Local Law Enforcement Assistance, specifically personal protective equipment for coronavirus response.
- $550M for Medicare & Medicaid Services Program Management Services for Coronavirus response.
- $1B under the Defense Production Act to produce medical ventilators and personal protective equipment to combat the coronavirus and treat patients.
- $1.874B for Children and Families Service Programs to respond to Coronavirus, domestically and internationally, such as Community Services Block Grant Act, the Head Start Act, and Family Violence and Prevention and Services Act.
- $27,014,500,000 for Public Health and Social Services Emergency Fund to prevent, prepare for, and response to coronavirus including the development of countermeasures and vaccines.
- $30.750B for the Department of Education grants to state Governors for the support of elementary, secondary, and post-secondary education programs for coronavirus response, including a separate Elementary and Secondary School Emergency Relief Fund.
- $25M for Distance Learning, Telemedicine, and Broadband Programs to prevent, prepare for, and respond to coronavirus.
- $14.432B for Veterans Health Administration for Medical Services to respond to the Coronavirus.
- Technology: $2.15B in Information Technology Systems for the Department of Administration for Veterans Affairs; $6M for the National Institute of Standards and Technology under the Department of Commerce; and $60M for industrial technology services related to manufacturing.
- $13M for Howard University and $7M for Gallaudet University for technology costs to accommodate distance learning required by coronavirus.
- $25M in Salaries and Expenses for the House of Representatives
- $700K in Salaries and Expenses for the Library of Congress
- $20M in Salaries and Expenses for the FBI, $15M in Salaries and Expenses for the DEA, $100M in Salaries and Expenses for the Prison System.
COVID-19 WORKFORCE EMERGENCY RESPONSE FUND FLEXIBILITY
Allows a Governor to use certain percentages of unobligated funds under the Workforce Innovation and Opportunity Act for continuity of workforce investment activities and services during the COVID–19 national emergency.
NO-COST COVID-19 CARE FOR MEDICARE RECIPIENTS
Increased federal financial support for Medicare programs, such as mental health services and no-cost coverage of any COVID-19 vaccine and treatment for Medicaid and Medicare recipients.
EMERGENCY CORONAVIRUS PANDEMIC UNEMPLOYMENT COMPENSATION
Extremely difficult to summarize, this division of the bill offers 3 primary benefits: 1) gives an emergency increase in unemployment insurance (UI) benefits of $600 per week through June 30, 2020, fully funded by the federal government; 2) creates the Pandemic Unemployment Assistance program, which provides up to 39 weeks of UI to people not otherwise eligible for regular unemployment compensation (includes 1099/self-employed persons); and 3) creates the Pandemic Emergency Unemployment Compensation program to provide 13 weeks of emergency UI for people who remain unemployed after they have exhausted their benefits or are not otherwise eligible for benefits.
For consumers, portions of the bill prevent evictions, suspends certain loan repayments, provides emergency rental and homeless assistance, provides mortgage forbearance and bankruptcy protections (such as not being required to use stimulus checks to pay bankruptcy creditors).
EDUCATION RELIEF AND OTHER PROGRAMS
The Secretary of Education will provide grants to Governors for educational relief to students and educational institutions, including local elementary and secondary schools, for unexpected expenses and unmet financial needs caused by qualifying emergencies.
SMALL BUSINESS ADMINISTRATION
Creates the paycheck protection program (again includes the self-employed), in which small businesses can utilize SBA loans for payroll costs, costs of group health care benefits, employee salaries (capped at certain amounts), mortgage payments or rent, utilities, and interests on debt. Certain loans under the SBA may be forgiven for eligible recipients and waive personal guarantee requirements for others.
Airlines will receive nearly $60 billion in financial assistance, including grants to pay airline and airport workers through September 2020, but with certain restrictions on stock “buy-backs.” Additionally, airplane manufacturers (Boeing has been mentioned by name in press conferences by POTUS) can receive loans to preserve operations as they are designated as critical to national security and part of the defense industrial base. However, lay offs or furloughs of workers may disqualify companies from receiving these federal loans.