Late Thursday, Senate Majority Leader Mitch McConnell released the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The bill is designed to protect the health of at-risk Americans and provide economic stimulus to distressed businesses and industries. Below are some of the economic provisions related to individuals and businesses.
- Individual stimulus checks: $1,200 per individual/$2,400 per couple with an extra $500 per child with phase out starting at $75,000/$150,000 in income (based on 2018 tax return)
- Tax filing deadline delayed to July 15, 2020 and estimated tax payments delayed to October 15, 2020
- Penalty free withdrawal from qualified retirement accounts up to $100,000, repayment over three years (income tax still applies)
- Allows partial above-the-line charitable tax deduction up to $300 for filers who take the standard deduction
- All testing for COVID-19 must be covered by private insurance with no cost sharing
- Requires private insurance to cover the full cost of a future COVID-19 vaccine
- Individuals with high-deductible health plans (HDHP)and health savings accounts to cover telehealth services prior to reaching the deductible
- Allows for HSAs and flex spending accounts to pay for over-the-counter medical products
- Allow individuals with HDHP to use HSA funds to pay for direct primary care subscription costs
- Business estimated tax payments delayed to October 15, 2020 and employer payroll tax payments delayed until January 1, 2021
- Net operating loss rules changed to allow deduction of losses in 2018, 2019, or 2020 including carryback up to five years. Taxable income limitation removed.
- Business interest expense deduction limit increased to 50% of EBITDA from 30%
- Technical correction to fix Qualified Improvement Property provision from Tax Cuts and Jobs Act
- Accelerated Corporate AMT credit recovery
- SBA maximum loan size increased to $10 million and expands uses to include payroll support, such as paid sick or medical leave, employee salaries, mortgage payments, and any other debt obligations
- Allows for loan forgiveness for payroll costs and debt obligation costs, with reductions of forgiveness for each employee laid off
- Authorizes additional provisions including entrepreneurial development and waiver of matching funds for Women’s Business Center programs
- Clarifies maximum amount an employer is required to pay for sick leave and family leave created under the Families First Coronavirus Response Act: $200 per day/$10,000 total for family leave and $511 per day/$5,110 for sick leave of employee, $200 per day/$2,000 for care of child or self-quarantine
- Re-hired employees are exempt from 30-day employment requirement in Families First Coronavirus Response Act
- Allows employers and self-employed individuals to receive an advance on sick and family leave costs instead of waiting for reimbursement by IRS, establishes regulatory authority by IRS to implement tax credit advances
- Provides $150 billion for sufficiently collateralized loans and loan guarantees to eligible entities, eligible entities will be determined by the Secretary of Treasury and are not eligible for credit from other sources
In addition to these provisions the bill includes many changes to regulations of the medical device and drug supply chains and reduction of red tape for healthcare options such as telehealth.
Senate Republicans are currently negotiating with Senate Democrats on changes to the bill before passage by the Senate. This legislation will then need to be taken up by the House for possible amendments or final passage.