NASE News

House Democratic Leadership Tees Up Next COVID-19 Response Stimulus

On Tuesday, May 12, the House Democratic Leadership introduced the HEROES (Health and Economic Recovery Omnibus Emergency Solutions) Act, a sweeping $3 Trillion relief package that touches every aspect of those suffering through the current crisis. The proposed legislation is inclusive of numerous Democrat priorities, many of which are considered non-starters for Senate Republicans. However, we anticipate some of these proposals will eventually find themselves in the final package of legislation that the House and Senate will pass in the weeks ahead.

As always continue to visit the NASE’s COVID19 resource web page for the most up to date information.

For the NASE, we have highlighted below some of the key proposals of which we believe are important to be included in the final legislation:

Changes to Paycheck Protection Program (PPP)

• Extension of the covered period from June 30 to December 31;

• Establishes a minimum maturity on PPP loans of 5 years to enable borrowers to amortize loans over a longer period of time, which lowers monthly payments;

• A carve out of 25% of the existing funds on the date of enactment to be used specifically for small businesses with 10 or fewer employees to guarantee they are fully able to access PPP assistance;

• Adds flexibility in the covered period for borrowers by extending the 8-week period to 24 weeks and extends the covered period from June 30 to December 31;

• Harmonizes the use of proceeds with forgiveness;

• Mandates forgiveness data collection and reporting;

• Creates a safe harbor for borrowers who cannot rehire in the prescribed time frame;

• Eliminates the 75/25 rule on use of loan proceeds

• Excludes certain loan forgiveness by the Small Business Administration, emergency EIDL grants, and certain loan payments from the gross income of the ultimate recipient.

• Clarifies that expenses paid or incurred with proceeds from Payment Protection Program loans that are forgiven pursuant to section 1106(b) of the CARES Act and certain loan forgiveness by Small Business Administration, emergency EIDL grants, and certain loan payments that are not included in gross income under section 333 of this Act do not result in a denial of any deduction or basis of any asset for federal tax purposes

• Clarifies that PPP loans cannot be calculated on a compound basis, saving borrowers money over the long-term

• Expands eligibility to all non-profits (also eligible for the Main Street Lending program)

Economic Injury Disaster Loan

• Provides an additional $10B for EIDL

Business interruption credit for the self-employed.

• Provides a 90% refundable individual income tax credit for certain self-employed individuals who have experienced a significant loss of income. The credit may be claimed on “qualified self-employment income” which is the loss in gross income for self-employment that exceeds a 10% reduction from 2019 to 2020, scaled using the ratio of net earnings from self-employment to gross income from self-employment in 2019. The amount of qualified self-employment income taken into account cannot exceed the reduction in adjusted gross income from 2019 to 2020, and is capped at $45,000. The credit phases out starting at $60,000 of adjusted gross income ($120,000 for married filing jointly) at a rate of $50 for every $100 of income.

Unemployment Benefits

• $600 per week FPUC supplement to state and federal unemployment benefits through January 31, 2021.

Pandemic Unemployment Assistance benefits (PUA)

• Extend Pandemic Unemployment Assistance benefits (PUA) provided to workers who do not qualify for regular unemployment compensation through January 31, 2021. Under this provision, workers would be able to apply for PUA through January 31, 2021. Individuals would receive all of the weeks of benefits so long as they are for weeks ending by March 31, 2021.

State and Local Taxes

• Eliminates the limitation on the deduction for state and local taxes for taxable years beginning on or after January 1, 2020 and on or before December 31, 2021.

Recovery Rebates (NEW/additional)

• Provides a $1,200 refundable tax credit for each family member that shall be paid out in advance payments, similar to the Economic Impact Payments in the CARES Act. The credit is $1,200 for a single taxpayer ($2,400 for joint filers), in addition to $1,200 per dependent up to a maximum of 3 dependents. The credit phases out starting at $75,000 of modified adjusted gross income ($112,500 for head of household filers and $150,000 for joint filers) at a rate of $5 per $100 of income. Treasury shall issue this credit as an advance payment based on the information on 2018 or 2019 tax returns.