The House of Representatives just passed the $2 trillion coronavirus emergency spending bills. The Senate passed the same bill a day ago. It is now waiting for the president’s signature.
The bill provides significant aids to both businesses and individuals affected by the coronavirus pandemic. It includes:
- Unemployment insurance provisions. It provides an additional $600 per week to each claimant for up to 4 months and extend UI benefits for an additional 13 weeks through December 31, 2020.
- Employee retention credit for employers subject to closure due to COVID-19. The provision provides a refundable payroll tax credit for 50% 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 available for employees retained but not currently working due the crisis for firms with > 100 employees and for all employee wages for firms with <= 100 employees.
- Delay of payment of employer payroll taxes. Employer portion of Social Security payroll tax payments will be delayed, with 50% owed on 12/31/2021 and the remaining 50% owed on 12/31/2022.
- Modifications for net operating losses. Net operating losses (NOL) are currently subject to a taxable-income limitation, and they cannot be carried back to reduce income in a prior tax year. The provision provides that an NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years. The provision also temporarily removes the taxable income limitation to allow an NOL to fully offset income.
- Modification of limitation on business interest. The provision temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.
We will keep you informed of additional updates as regulations are issued by DOL and IRS.
It is also expected that a 4th stimulus bill will be taken up when Congress returns to Washington which is tentatively scheduled for late April. We will monitor those efforts closely and keep you updated as we push for benefits to all businesses while the recovery efforts continue.
For a summary of the bill, see the links below from the Senate Finance and Tax Foundation. If the links do not open immediately, please copy and paste the links into a browser.