The federal Coronavirus Aid, Relief and Economic Security Act (CARES) passed March 27 and was signed into law. Highlights include:
DIRECT PAYMENTS TO INDIVIDUALS
Single Americans, $1,200, married couples would get $2,400 and parents would see $500 for each child under age 17 for those making $75,000 or less. Those with incomes less than $99,000 will receive reduced payments. Those making more than $99,000 would not qualify at all. The thresholds are doubled for couples. Income based on 2018 tax returns.
The IRS will directly deposit the recovery rebate checks in the bank accounts of Americans who have set up Direct Deposit with the agency (within 30 days), and mail checks to those who haven’t (six to eight weeks).
KEEPING AMERICANS PAID & EMPLOYED
$350 billion for a new Paycheck Protection Program to make loans to small businesses, self-employed individuals & “gig economy” workers; and certain non-profits.
Loans under the Paycheck Protection Program would equal 250% of an employer’s average monthly payroll, to a maximum loan amount of $10 million, and would have a 100% federal guarantee. Covered payroll costs include salary, wages, and payment of cash tips; employee group healthcare benefits, including insurance premiums; retirement contributions; and covered leave.
Loans will be forgiven if spent on wages, mortgage interest payments, rent or utilities.
Forgiveness amounts would be reduced proportionally by any reduction in employees compared to the prior year & reduced by the reduction in pay of any employee.
Loans are available immediately through SBA-certified lenders.
PAYROLL TAX CREDIT
Employers whose operations were fully or partially suspended due to a coronavirus-related shutdown order, or whose gross receipts declined by more than 50% compared to the same quarter the prior year, are eligible for an employee retention credit. It would be a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis and based upon qualified wages paid to the employee.
PROTECTIONS AGAINST FORECLOSURES AND EVICTIONS
The bill includes housing protections against foreclosures on mortgages and evictions for renters.
Anyone facing a financial hardship from coronavirus shall be given a forbearance on a federally backed mortgage loan of up to 60 days, which can be extended for four periods of 30 days each. Servicers of federally backed mortgage loans may not begin the foreclosure process for 60 days from March 18.
The bill also does not allow fees, penalties or additional interest to be charged as a result of delayed payments. It includes similar protections for those with multifamily federal mortgage loans, allowing them to receive a 30-day forbearance and up to two 30-day extensions.
Those with federally backed mortgage loans who have tenants would also not be allowed to evict tenants solely for failure to pay rent for a 120-day period, and they may not charge fees or penalties to tenants for failing to pay rent.
CHARITABLE CONTRIBUTIONS CREDIT
To encourage Americans to contribute to churches & charitable organizations in 2020, they would be permitted to deduct up to $300 of cash contributions “above the line” (i.e. whether or not they itemize their deductions).
CONSUMER PROTECTIONS
Credit reporting agencies who agree to account forbearance or agree to modified payments with respect to an obligation or account of a consumer that has been impacted by COVID-19 would be required to report that obligation or account as either “current” or as the status reported prior to the accommodation (unless the consumer becomes current). This credit protection would be available beginning Jan. 31, 2020, and end at the later of 120 days after enactment or 120 days after the termination of the coronavirus national emergency declaration.
STUDENT LOAN PAYMENTS SUSPENDED
The Department of Education would suspend payments on student loan borrowers without penalty through Sept. 30.
