Weekly Commentary 1, March 20, 2020
Weekly Commentary 2, March 27, 2020
Weekly Commentary 3, April 3, 2020
Weekly Commentary 4, April 10, 2020
Weekly Commentary 5, April 17, 2020
Weekly Commentary 6, April 23, 2020

• 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)