Senate Passage of CARES Act – Awaiting House Action and Signature of the President
The Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. With a $2.2 trillion price tag, the bill is the most expensive piece of legislation ever passed. The bill passed in the Senate late on March 25, 2020 and now goes to the House. Whether the House takes up the Senate bill as is and is able to approve it quickly, or makes changes by incorporating its version remains to be seen. The President has indicated we would sign the bill “immediately.”
The Senate bill looks to make a significant impact on the economy by providing loan forgiveness, supporting small businesses, enhancing unemployment insurance, and providing federal loans to industries severely impacted by the pandemic. In addition, it provides tax relief and tax incentives for individuals and businesses alike. The majority of the tax relief is designed to increase liquidity in the economy, largely through the relaxation of limitations on business deductions and the deferral of taxes, but also with the introduction of cash payments to individuals.
Some of the key provisions of the bill include:
- A loan program for qualifying businesses under an SBA “Paycheck Protection” program – while structured initially as a 100% federally-guaranteed loan, it is effectively a grant program for companies that retain workers on their payrolls. Borrowers may seek forgiveness/cancellation of the debt to the extent employment levels are maintained for a designated period,
- Unemployment insurance provisions for economic relief and much-needed support for workers, including an expansion of benefits and period during which benefits are paid,
- Rebates or cash payments to individuals and families below certain income limits,
- Relaxation of rules on retirement plan fund distributions to allow more flexibility without penalties,
- Delay of payroll tax payments for employers,
- Credits for payroll tax payments for certain employers, and
- Net operating loss provisions to allow immediate carryback for losses incurred in 2018 and 2019, and loss carrybacks for 2020 when filed.
Additional information on the CARES Act can be found at the links below:
We will also be providing and posting to our BMSS COVID-19 webpage as we analyze the contents of the bill.