CARES Act Summary

The Senate swept aside some last minute negotiations but finally cleared the $2 trillion Coronavirus relief package–after the 96-0 vote. Now, all that stands between the downward economy and a $2 trillion Coronavirus disaster relief package is a House vote. We have put together a summary of the bill so you don’t have to read all 880 pages.

Deal is reached— Senate Majority Leader Mitch McConnell announced at 1:37 a.m. Wednesday that Senate Republicans and Democrats had struck a deal on a $2 trillion bill — the largest in U.S. history — to prop up hospitals, local governments and the economy amid the coronavirus crisis.

The package details are coming out but the stimulus package includes two parts a policy portion and then an Appropriations emergency spending piece. These are the final numbers in the Legislation text.

Direct payments of $1,200 per American and $2,400 for couples—if making $75,000 or less annual salary; $150,000 for couples. All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not a dependent of another taxpayer and have a work eligible social security number, are eligible for the full $1,200 ($2,400 married) rebate. In addition, they are eligible for an additional $500 per child. For the vast majority of Americans, no action on their part will be required in order to receive a rebate check as IRS will use a taxpayer’s 2019 tax return if filed, or in the alternative their 2018 return.

This includes many low-income individuals who file a tax return in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit. The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.

Hospitals—$150 Billion for medical facilities to provide necessary care. This includes a massive new grant program for hospitals and health care providers, personal and protective equipment for health care workers, testing supplies, increased workforce and training, new construction to house patients, emergency operation centers and more. Additional funding is also dedicated to delivering Medicare payment increases to all hospitals and providers to ensure that they receive the funding they need during this crisis, and new investments in our country’s Strategic National Stockpile, surge capacity and medical research into COVID-19.

State and Local Governments Provides $150 billion to States, Territories, and Tribal governments to use for expenditures incurred due to the public health emergency with respect to COVID-19 in the face of revenue declines, allocated by population proportions, with a minimum of $1.25 billion for states with relatively small population

Small Businesses–$349 Billion in new small business lending through the SBA 7(a) program for small businesses and nonprofits under 500 employees that are affected by COVID-19.  These loans will be written on favorable terms and will feature forgiveness for the portion of the loan used on payroll, rent, mortgage payments, and utilities in the coming weeks, provided that employers retain their payroll or re-hire workers previously laid off.

Larger industries–Provides $500 billion to Treasury’s Exchange Stabilization Fund to provide loans, loan guarantees, and other investments, distributed as follows: Direct lending, including: a. $25 billion for passenger air carriers, and approved to perform inspection, repair, replace, or overhaul services, and ticket agents;  $4 billion for cargo air carriers; and  $17 billion for businesses important to maintaining national security—Boeing bailout.

 $454 billion, as well as any amounts available but not used for direct lending, for loans, loan guarantees, and investments in support of the Federal Reserve’s lending facilities to eligible businesses, states, and municipalities.

Emergency Increase in Unemployment Compensation Benefitsprovides an additional $600 per week payment to each recipient of unemployment insurance or Pandemic Unemployment Assistance for up to four months.

Employee retention credit for employers subject to closure due to COVID-19 The provision 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 based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is 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 December 31, 20

Delay of payment of employer 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. Employers generally 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.

And Much Much More. We will continue to monitor and provide information as soon as possible. Contact Andrew Levert with any questions. 

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