CARES Act Passes in the House
Finally, we're receiving good news today.
State News
Locally, Massachusetts has extended it's tax filing and payment deadline to July 15, 2020, matching the new Federal date. Please let us know if you have any questions about your tax filing.
Federal News
Relief is on the way for individuals and businesses suffering the financial fallout of the coronavirus, thanks to the ~$2 trillion emergency relief package currently making its way to the president’s desk – the biggest stimulus package in American history.
The CARES Act passed the Senate late Wednesday in a unanimous vote. After passing a House vote today, President Trump is expected to quickly sign the bill into law. Late Thursday night, members of Congress rushed back to D.C. to make the vote.
Spanning 800 pages, the CARES Act is a massive piece of legislation with several key goals. Nearly every American will be eligible for relief of some kind. The provisions fall into several categories.
Payments for Individuals. Any U.S. resident with a work-eligible SSN who has an adjusted gross income of up to $75,000 (or $150,000 for a married couple) will get a one-time payment of up to $1,200 ($2,400 for a married couple). Eligible Americans will also receive up to $500 per child. An individual who earns more than $75,000 but less than $99,000 may be eligible for a lesser amount. The IRS will use 2019 or 2018 tax returns to determine payments. Eligible individuals don’t have to take any action to receive a check.
Small Business Loans and Grants. The Act establishes $377 billion in support for small businesses. Most of the money will be used to make loans to qualifying businesses, through an SBA loan guaranty program called the Paycheck Protection Program. Each business will be able to borrow up to 2.5 times its average monthly payroll with a maximum cap of $10 million. The money can be used to cover payroll, rent, utilities and mortgage/debt interest. Loans that are used to continue employing workers through June would be eligible for forgiveness. For businesses that have had to suspend operations because of the virus, the Act also creates a refundable payroll tax credit equal to 50 percent of qualified wages paid, with a maximum credit of $5,000 per employee. Finally, CARES would also suspend some tax provisions currently imposed by the Tax Cuts and Jobs Act.
Big Business Support. Major corporations will benefit from about $500 billion in loans and other types of support. These businesses will have to repay any loans made under the Act. Special funds will be earmarked for loans to passenger airlines and the U.S. Postal Service in the interest of keeping them operational.
Unemployment Benefits. An estimated $260 billion will be spent to expand and extend unemployment benefits, though that number may change as the number of Americans newly applying for benefits goes up. Payments will be increased by $600 per week, more workers will be made eligible and benefits will be extended by 13 weeks.
State and Local Government COVID Response. Nearly $340 billion is designated to support state and local governments, with $274 billion specifically intended to cover costs associated with response efforts.
Public Health Support. As the nation’s healthcare system is pummeled by coronavirus, the Act would increase funding to hospitals by $100 billion. An additional $20 billion is set aside for veterans, and there are separate funds for prescription drug costs, medical equipment and CDC support.
Other provisions include:
A temporary pause on rules around RMDs for retirement accounts, allowing seniors the option to defer distributions during 2020.
Approval to withdraw up to $100,000 from retirement accounts for COVID-related reasons without penalty.
About $25 billion for food stamps, food banks and child nutrition funding.
A temporary tax deduction of up to $300 for charitable contributions made during 2020.
An expansion of FEMA’s disaster assistance fund.
The emergency relief provisions for small businesses are especially critical for many of you. Loans will be made through banks and other lenders approved by the SBA and Treasury. Unlike SBA 7(a) loans, under the CARES Act borrowers won’t have to prove they’re unable to get credit elsewhere. Further guidance should be coming from the SBA once the Act becomes law. We’ll keep you updated on that and other developments as they happen.
We know that things are happening quickly and a lot of new information is coming out daily. Know that the team at Livingston & Haynes is always here to provide guidance. We’ll be forming a CARES Act response team in the coming days to better support our individual and small business clients as we all work together to recover from this crisis. In the meantime, please don’t hesitate to reach out with questions or concerns.