House Democrats Propose Massive New COVID-19 Relief PackagePete Scott - May 13 2020
The Democrats proposal for additional Coronavirus impact relief contains some provisions of interest to Worldwide ERC® members.
Yesterday, Democrats in the U.S. House of Representatives released another giant, $3 trillion, coronavirus relief bill (H.R. 6800) that enhances many of the benefits contained in previous relief legislation. The Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) is scheduled for a vote in the House on Friday, 15 May. Both House and U.S. Senate Republicans are opposed to the legislation, but it is likely that some of the provisions of the bill will end up being adopted as part of expected additional relief legislation in June.
Since 10 March, Worldwide ERC® has been pushing for financial relief including favorable business loans and tax relief for the workforce mobility community. Worldwide ERC® again sent a letter on 20 April to congressional leaders requesting additional financial relief assistance including several provisions included in the HEROES Act.
Here is a brief summary of some of the provisions in this more than 1,800-page bill that are of interest to Worldwide ERC® members.
Payroll Tax Deferral
Worldwide ERC® was one of only a small number of organizations to advocate for businesses to be allowed to take advantage of the deferral of payroll taxes (half to 2021 and half to 2022) even if they have a loan forgiven under the Payroll Protection Program. The HEROES Act includes this provision as outlined in our letter of 20 April to congressional leaders.
A new round of $1,200 stimulus payments would be sent out, using the same mechanism as was used already. However, the amounts per dependent would be increased from $500 to $1,200 for up to three dependents, so the total maximum for a family of five would be $6,000. Also, all dependents would now be included, not just those under 17. Further, the changes in the definition of a qualifying dependent would be retroactive to the earlier round of $500 payments for dependents, so many additional $500 payments would be made.
In addition, anyone with a taxpayer ID number would be eligible, not just those with a social security number, which would cover individuals such as foreign spouses who have ITINs but not Social Security numbers, and this change would be retroactive to the original round of payments.
Finally, all payments, including the original round, would be exempt from any form of debt levy, and would be protected from being taken in a bankruptcy proceeding. Worldwide ERC® has been advocating for direct financial relief for employees.
Child Tax Credit
The proposal would make the existing child tax credit fully refundable for 2020, make 17-year-olds qualifying children (currently only those under 17), and increase the amount from $2,000 per child to $3,000.
The proposal would create a 30% refundable payroll tax credit for amounts employers spend for disaster relief payments or reimbursements for employees, up to $5,000 per employee (up to 50% for certain essential pandemic workers). It is not clear how this provision interacts with the existing tax exclusion for such payments in section 139 of the Code.
State and Local Taxes
The proposed language eliminates the $10,000 limit on individual deductions for state and local taxes for 2020 and 2021.
Employee Retention Tax Credit (ERTC)
This is a refundable credit for up to 50% of up to $10,000 in wages paid to each employee after 12 March and before 1 January 2021. The bill increases the allowable percentage to 80% and the wage limit to $15,000 per employee. It also changes the definition of employers allowed to take the entire credit even if not all their employees are working from those with less than 100 employees to those with less than 1,500. Group health plan expenses would be counted as qualifying wages even if no other wages are being paid. The bill also provides a 50% refundable payroll tax credit for qualified fixed costs, which include rent, mortgages, and utilities, retroactive to the original CARES Act.
Expenses Paid From PPP Loans
The bill reverses an IRS position that expenses paid using forgiven loans under the PPP are not deductible.
Foreclosures and Evictions
The bill provides an array of new protections for mortgage borrowers and renters. It expands the protections of the CARES Act to all mortgages, not just FHA mortgages, and expands and extends the eviction moratorium to renters.