Phase One: [enacted March 6th, 2020] – The package appropriates $8.3 billion in emergency funding to give the federal government the initial tools to respond to the coronavirus outbreak. The law provides fiscal year 2020 supplemental funding for the Food and Drug Administration, the Centers for Disease Control and Prevention, the National Institutes of Health, the Public Health and Social Services Emergency Fund, and the Small Business Administration (SBA), among other agencies.
Economic Injury Disaster Loan (EIDL)-
- Go to <http://disasterloan.sba.gov> and click “Apply for Assistance” to begin the application process.
- Follow the link at “To apply for a COVID-19 Economic Injury Disaster Loan, Click Here.” This takes you to the SBA’s streamlined COVID-19 EIDL application.
- Applying does not mean you have to take what is offered
3.75% loan rate (2.75% for 501(c)(3) nonprofits)
Up to 30-year term loans
Loans above $25K may require collateral
Approved on a case by case basis
- Loan Advance – Signed into law on Friday, March 27, 2020, the CARES Act provides additional assistance for small business owners, including the opportunity to receive up to a $10,000 Advance on an Economic Injury Disaster Loan (EIDL) for emergency capital.
Phase Two: Enacted March 18th, 2020, H.R. 6201, Families First Coronavirus Response Act – Beginning on April 1st, the act provides paid sick leave and partially paid Family and Medical leave, free coronavirus testing, expands food assistance and unemployment benefits, and requires employers to provide additional protections for health care workers.
- Paid Sick Leave
The law includes a requirement on employers to provide paid sick leave and partially paid FMLA leave to employees.
- Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or where childcare is unavailable in cases when the viability of the business is threatened.
- Employers are required to post the FFCRA Employee Rights Notice pdf from the Department of Labor to employees – Link to the poster here:
- For COVID-19 related reasons, including when employees’ children’s schools and daycares are closed, employees receive up to 80 hours of paid sick leave and expanded paid childcare leave.
- In Harris, Montgomery, and Fort Bend counties, paid leave becomes effective April 1st because schools have been closed and stay-at-home orders have been issued in these and other surrounding regions.
- Refundable Tax Credits
- The law provides refundable tax credits to employers designed to offset the costs of providing that leave.
- Under the Families First Coronavirus Response Act, small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.
Employers face no payroll tax liability.
An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
Where a refund is owed, the IRS will send the refund as quickly as possible.
Health insurance costs are also included in the credit.
Employers receive 100% reimbursement for paid leave pursuant to the Act.
Self-employed individuals receive an equivalent credit.
The Act will help give all American businesses, with fewer than 500 employees, funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
For more information go to:
Phase Three: The third phase of the coronavirus stimulus package, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed on March 27th, 2020. The bill provides $2 trillion for assistance to healthcare providers, businesses, and employees prevented from working by coronavirus-related conditions.
Below are many of the key details from the CARES Act.
- Recovery Rebates
- $1,200 direct payments to individuals; $2,400 for married couples; and $500 per child dependent under 17 years old.
- Phase out begins for Individual taxpayers at adjusted gross income (AGI) of $75,000 and is completely phased out beyond AGI of $99,000.
- For married couples the phase out begins at AGI of $150,000 and ends at $198,000.
- For heads of household the phase out begins at AGI of $112,500 and ends at $146,500.
- No action will be required in order to receive a direct payment check as the IRS will use a taxpayer’s 2019 tax return if filed, or their 2018 return.
- Pandemic Assistance Program – Creates a temporary program through December 31, 2020, to provide payment to those not traditionally eligible for unemployment benefits, e.g. self-employed. The program may provide payments of $600 per week to each beneficiary of the Pandemic unemployment assistance for up to four months. You must apply for unemployment benefits to receive the additional funds.
- Small Business Assistance – an additional $377 billion in assistance for small businesses during the coronavirus outbreak. In large part, loans are designed to enable small businesses to retain employees. A considerable portion of the loans also allow small businesses to pay for other expenses such as mortgages, rent or utilities.
- Paycheck Protection Program – Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. See pdf brochure from the US Chamber of Commerce here: https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final_revised.pdf<https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final_revised.pdf
- Employee Retention Credit for Employers – The Act 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:
Operations were fully or partially suspended, due to a COVID-19- related shut-down order, or
Gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.
Delay of Employer Payroll Taxes Payment – Allows employers and self- employed individuals to defer payment of their share of the 6.2% Social Security tax they otherwise pay over the next two years, with half required to be paid by Dec. 31, 2021 and the other half by Dec. 31, 2022. (More guidance to come)
- Student Loan Repayment Benefit – The bill waives taxes for employers that create a student loan repayment benefit for employees. An employer may contribute up to $5,250 annually, and such payment would be excluded from the employee’s income. The $5,250 cap applies to other educational assistance (e.g., tuition, fees, books) provided by the employer. Expires December 31, 2020.
Source: https://www.finance.senate.gov/imo/media/doc/CARES%20Act%20Section-by-<https://www.finance.senate.gov/imo/media/doc/CARES%20Act%20Section-by-Section%20(Tax%2C%20Unemployment%20Insurance).pdf> Section%20(Tax,%20Unemployment%20Insurance).pdf<https://www.finance.senate.gov/imo/media/doc/CARES%20Act%20Section-by-Section%20(Tax%2C%20Unemployment%20Insurance).pdf>
- Retirement Plan Benefits
- Qualified Plan Distribution Waiver – The Act waives the 10-percent early withdrawal penalty for distributions from qualified retirement accounts up to $100,000 for coronavirus-related purposes made on or after January 1, 2020. A coronavirus-related distribution is one made to an individual who:
Is diagnosed with COVID-19
Has a spouse or dependent diagnosed with COVID-19 or
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 due to COVID-19, 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.
The distributions would be subject to tax over three years, and the taxpayer may recontribute the funds within three years without regard to that year’s cap on contributions.
Temporary Waiver of RMDs for Certain Retirement Plans – The Act waives the required minimum distribution rules for certain qualified plans and IRAs (including 403(b) and 457(f) plans) for calendar year 2020 for individuals who would otherwise be required to withdraw funds from such retirement accounts during the economic slowdown due to COVID-19.
Source: https://www.forbes.com/sites/bobcarlson/2020/03/28/ira-and-retirement-plan-changes-in-the-cares-<https://www.forbes.com/sites/bobcarlson/2020/03/28/ira-and-retirement-plan-changes-in-the-cares-act/#1ee786ae34f5> act/#1ee786ae34f5<https://www.forbes.com/sites/bobcarlson/2020/03/28/ira-and-retirement-plan-changes-in-the-cares-act/#1ee786ae34f5>
https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions https://www.dol.gov/agencies/whd/pandemic/ffcra-questions