HCG Resource Center for COVID-19

Federal Government

Updates as of the week of April 20, 2020

The $484 package includes an additional $321 billion for the newly created Paycheck Protection Program.

 

Information regarding the Paycheck Protection Program Loans

Paycheck Protection Program | COVID-19 Forgivable Loans

The U.S. Department of Treasury updates

  • The first wave of stimulus checks are being deposited this week. Release of stimulus pay is based on tax brackets. The Treasury is releasing a web portal on April 17, 2020 to collect banking information for the IRS so individuals can receive their payments sooner
  • The Department of Treasury is starting to roll out the $340 billion Paycheck Protection Program to assist small businesses
  • Relief funds are scheduled to be released soon to State, Local, and Tribal governments through the $150 billion Coronvirus Relief Fund as outlined in the CARES Act
  • Employers of all sizes can now receive an Employee Retention Credit for keeping employees on payroll from March 13-December 31, 2020

 

Updates as of the week of March 30, 2020

5 Key Things in the $2 Trillion Coronavrius Stimulus Package

 

Here’s What’s in the $2 Trillion Virus Stimulus Package

Updates as of March 26, 2020

 

Senate Leadership Agrees to nearly $2 Trillion Phase 3 COVID-19 Response Bill

Individuals

  • 2020 recovery rebates for individuals
    Provides checks of up to:

    • $1,200 for single taxpayers
    • $2,400 for married joint filers
    • $500 for each dependent child

These checks are based on federal 2018 returns. They are reduced for higher income taxpayers, with phaseouts beginning at $75,000 for single taxpayers and $150,000 for married joint filers, and ending for single taxpayers with incomes exceeding $99,000 and married joint filers with no children and incomes exceeding $198,000.

Taxpayers with little or no income tax liability, but at least $2,500 of qualifying income, would be able to receive:

  • $600 for single taxpayers
  • $1,200 for married joint filers

Qualifying income includes earned income, Social Security retirement benefits and certain compensation and pension benefits paid to veterans(Section 2201)

read more

  • Unemployment Insurance

Provides expanded unemployment insurance benefits.  The bill:

  1. Creates a temporary Pandemic Unemployment Assistance program for those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the coronavirus public health emergency.
  2. Provides payments to states to reimburse nonprofits, government agencies, and Indian tribes for half of the costs they incur through December 31, 2020 to pay unemployment benefits.
  3. Provides an additional $600 per week payment to each recipient of unemployment insurance or Pandemic Unemployment Assistance for up to four months.
  4. Provides funding to pay the cost of the first week of unemployment benefits for states that choose to pay recipients as soon as they become unemployed instead of waiting one week before the individual is eligible to receive benefits.
  5. Provides an additional 13 weeks of unemployment benefits to help those who remain unemployed after weeks of state unemployment benefits are no longer available.
  6. Provides funding to support “short-time compensation” programs, where employers reduce employee hours instead of laying off workers and the employees with reduced hours receive a pro-rated unemployment benefit. This provision would pay 100 percent of the costs they incur in providing this short-time compensation.
  7. Provides funding to support states which begin “short-time compensation” programs. This provision would pay 50 percent of the costs that a state incurs in providing short-time compensation. (Sections 2102-2109)
  • Relaxation of Charitable Deduction Limits
    Allowance of $300 above the line deduction for charitable contributions in 2020. (Section 2204)

Suspends the 50 percent of adjusted gross income limitation for 2020.(For corporations, the 10-percent limitation is increased to 25 percent of taxable income.)(Section 2205)

  • Special rules for use of retirement funds
    Waives the 10-percent early withdrawal for distributions up to $100,000 for coronavirus purposes. In addition, income attributable to such distributions would be subject to tax over three years and taxpayer may recontribute to an eligible retirement plan within three years without regard to the annual cap. Coronavirus-related distributions include distributions to an individual:
  1. Who is diagnosed with COVID-19
  2. Whose spouse or dependent is diagnosed with COVID-19
  3. Who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary (Section 2202)
  • Income tax exclusion for student loans
    Provide income tax exclusion for individuals who are receiving up to $5,250 in student loan repayment assistance from their employer (Section 2206)

Businesses

  • $500 Billion Treasury Exchange Stabilization Fund
    Provides $454 billion for loans, loan guarantees and other investments in support of the Federal Reserve’s lending facilities to eligible businesses, states and municipalities. (Sec. 4003) Contains limits on employee compensation.

Provides $46 billion for direct lending to air carriers and ancillary services, and businesses important to maintaining national security.

  • Delay of employer payroll tax payments
    Allows employers and self-employed individuals to defer payments of the employer share of the Social Security tax on behalf of their employees. Deferred payments must be paid over the following two years, with half due by Dec. 31, 2021 and the other half by Dec. 31, 2022. (Section 2302)
     
  • Small Business Administration Grants
  1. SBA will administrator a $349 billion Paycheck Protection Program
    • Eligible recipients include small businesses, self-employed individuals, nonprofits and Tribal business concerns
    • Allowable uses include payroll, rent, mortgage payments, and utility costs. (Sections 1102 and 1107)
    • Borrower eligible for loan forgiveness on amounts spent during an 8-week period after the origination date of the loan on qualifying payroll costs, interest payments on mortgages, rent, and utilities.
      • Amount forgiven is a function of number of employees retained. (Section 1106)
  2. $10 billion for Small Business Administration (SBA) emergency (Economic Injury Disaster Loan) grants of up to $10,000 to provide immediate relief for small business operating costs. (Section 1107)
  3. $17 billion for SBA to cover 6 months of payments for small businesses with existing SBA loans. (Section 1107)
  • Employee Retention Tax Credits

Provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.

The credit is generally provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through Dec. 31, 2020. (Section 2301)

  • Modification of limitation on business interest
    Temporarily increases the limitation on the ability to deduct interest expenses from 30 percent to 50 percent of taxable income for 2019 and 2020. (Section 2306(This may necessitate filing amended or superceded 2019 returns.)
     
  • Technical amendment on qualified improvement property
    Enables businesses to immediately write off costs associated with improving facilities instead of depreciating them over the life of the building.  Would allow amending a prior year return to take advantage of this provision and correct a drafting error in the 2017 tax reform law. (Section 2307)
     
  • Modifications for net operating losses
    Provides that a net operating loss (NOL) from 2018, 2019 or 2020 can be carried back five years, and temporarily removes the taxable income limitation to allow a NOL to fully offset income. (Section 2303)
     
  • Modification of loss limitation for taxpayers other than corporations
    Allows pass-throughs and sole proprietors to benefit from the relaxed NOL carryback. (Section 2304)
     
  • Modification of AMT credits
    Accelerates the ability for companies to claim eligible alternative minimum tax (AMT) credits now instead of as originally expected through 2021. (Section 2305)
     
  • Limitations on Paid Leave
    Limitations on mandated family and sick leave, enacted in the phase 2 coronavirus legislation.  (See Novogradac Client Alert: Highlights from H.R.6201 – Families First Coronavirus Response Act.) (Secs. 3601 and 3602)
     
  • Forbearance of Residential Mortgage Loan Payments for Multifamily Properties with Federally Backed Loans.
    Provides up to 90 days of forbearance for multifamily borrowers with a federally backed multifamily mortgage loan who have experienced a financial hardship. Borrowers receiving forbearance may not evict or charge late fees to tenants for the duration of the forbearance period. Applicable mortgages include loans to real property designed for five or more families that are purchased, insured or assisted by Fannie Mae, Freddie Mac or HUD.  (Section 4023)
     
  • Temporary Moratorium on Eviction Filings.
    For 120 days beginning on the date of enactment, landlords are prohibited from initiating legal action to recover possession of a rental unit or to charge fees, penalties or other charges to the tenant related to such nonpayment of rent where the landlord’s mortgage on that property is insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program or the Violence Against Women Act of 1994. (Section 4024)

Defense Production Act (DPA)/ Emergency Powers – Executive Order – March 19, 2020

  • President can incentivize U.S. companies and industries to increase the production of critical equipment and goods, in part through loans and loan guarantees
  • DPA can be helpful in removing obstacles in the supply chain by prioritizing the production of critical goods.

Families First Coronavirus Response Act ~$350B – March 18, 2020

  • Provides paid sick and family leave
  • Free COVID-19 testing
  • expanded food assistance and unemployment benefits, and additional protections for health care workers
  • R. 6201 & Supplement

President declares National Emergency – March 13, 2020

  • Frees up billions in federal funds
  • President invoked Stafford Act; designed to bring orderly and systematic means of federal natural disaster assistance for state and local governments in carrying out their responsibilities to aid citizens

The Federal Reserve

Updates as of the week of April 20, 2020

Federal Reserve expands access to its Paycheck Protection Program Liquidity Facility

To facilitate lending to small businesses via the Small Business Administration’s Paycheck Protection Program (PPP), the Federal Reserve on Thursday announced that it is working to expand access to its Paycheck Protection Program Liquidity Facility (PPPLF) for additional SBA-qualified lenders as soon as possible.

SBA-qualified PPP lenders include depository institutions, such as banks and credit unions, as well as non-depository institution lenders, such as some Community Development Financial Institutions. Currently, only depository institutions are eligible to participate in the PPPLF, and over 1000 have already been approved to access the program.

The SBA’s PPP guarantees loans from qualified lenders to small businesses so that those businesses can keep workers employed. The PPPLF supports the PPP by extending credit to financial institutions that make PPP loans, using the loans as collateral. The additional liquidity from the PPPLF increases the capacity of financial institutions to make additional PPP loans.

Updates as of the week of April 13, 2020

Federal Reserve take additional actions to provide up to $2.3 trillion in loans to support the economy

  • Bolster the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses.
  • Ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program.
  • The Department of the Treasury, using funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will provide $75 billion in equity to the facility.
  • Increase the flow of credit to households and businesses through capital markets
  • Help state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities.

Updates as of the week of March 23, 2020

Federal Reserve announces extensive new measures to support the economy

  • The Federal Open Market Committe (FOMC) will purchase at least $500 billion of Treasury Securities and at least $200 billion of mortgage-backed securities
  • $30 billion in financing to new credit programs to employers, consumers, and businesses
  • Dept. of Treasury will provide $30 billion in equity to new credit programs
  • Two new facilities to support credit: 
    • Primary Market Corporate Credit Facility (PMCCF)
    • Secondary Market corporate Credit Facility (SMCCF)
  • Third facility to support flow of credit to consumers and businesses 
    • Term Asset-Backed Securities Loan Facility (TALF)
  • Expansion of Money Market Mutual Fund Liquidity Facility (MMLF)
  • Expansion of the Commercial Paper Funding Facility (CPFF)
  • Forthcoming: Main Street Business Lending Program to support small and medium sizes businesses in conjunction with the SBA

Updates as of the week of March 16, 2020

  • Fed Funds rate cut to 0%
  • Quantitative easing $700mm ($80mm on 3.16 & 3.17) rest over next few months
  • Discount window – reduced prime rate by 150bps
  • Flexibility in Bank Capital requirements
  • Coordinated International Action to Lower Pricing on U.S. Dollar Liquidity Swap Arrangements
  • Creation of a Commercial Paper Funding Facility
  • Creation of a Primary Dealer Credit Facility

State and Local Government