DC Tax Flash: Senate GOP Phase Four Relief Bill Emerges

Tax Alert
07.27.2020

Senate Majority Leader Mitch McConnell (R-KY) spoke on the floor today about the phase four coronavirus relief package being released this evening in several pieces by various Republican Senators. Though released in sections, the forthcoming package will eventually be unified as a single bill titled the "Health, Economic Assistance, Liability Protection and Schools (HEALS) Act."

Leader McConnell sketched out various portions of the relief package, which he said is targeted at getting children back to school, getting Americans back to work and helping the health care sector to improve diagnostics, treat victims and find a vaccine. With the bill's release, negotiations with Democrats in Congress will begin almost immediately.  

On tax policy, Finance Committee Chairman Charles Grassley (R-IA) released a summary and legislative text for the tax provisions in the HEALS Act, which include $1,200 direct payments to taxpayers, improvements to the employee retention credit, a temporary expansion of the Work Opportunity Tax Credit (WOTC), and a new credit for employers that invest in protection equipment and redesigns for employee safety.

This new credit would function as a refundable payroll tax credit "equal to 50 percent of an employer's 'qualified employee protection expenses,' such as testing for COVID-19, protective personal equipment, cleaning supplies, 'qualified workplace reconfiguration expenses,' including modifications to workspaces for the purpose of protecting employees and customers from the spread of COVID-19, and 'qualified workplace technology expenses,' including contactless point-of-sale systems and other technology to track employee interactions with customers," according to a Finance Committee summary.

The following lists all the major sections of the Finance Committee bill:

American Workers, Families, and Employers Assistance Act

TITLE I – FURTHER RELIEF FOR WORKERS AFFECTED BY CORONAVIRUS

  • Section 101 – Improvements to Federal Pandemic Unemployment Compensation to better match lost wages
  • Section 102 – Supplemental emergency unemployment relief for governmental entities and nonprofit organizations
  • Section 103 – Conforming eligibility for pandemic unemployment assistance to disaster unemployment assistance and accelerating appeal review
  • Section 104 – Improvements to State unemployment insurance systems and strengthening program integrity
  • Section 105 – TANF Coronavirus Emergency Fund

TITLE II – ASSISTANCE TO INDIVIDUALS, FAMILIES AND EMPLOYERS TO REOPEN THE ECONOMY

SUBTITLE A – RELIEF FOR INDIVIDUALS AND FAMILIES

  • Sections 201 & 202 – Additional 2020 recovery rebates for individuals and modifications to recovery rebates made under the CARES Act

SUBTITLE B – JOB CREATION AND EMPLOYMENT

  • Section 211 – Enhanced employee hiring and retention payroll tax credit
  • Section 212 – Temporary expansion of work opportunity tax credit
  • Section 213 – Safe and healthy workplace tax credit
  • Section 214 – COVID-19 assistance provided to independent contractors

SUBTITLE C – CARES ACT CLARIFICATIONS AND CORRECTIONS

  • Section 221 – Application of special rules to money purchase pension plans
  • Section 222 – Clarification of delay in payment of minimum required contributions
  • Section 223 – Employee certification as to eligibility for increased CARES Act loan limits from employer plan
  • Section 224 – Election to waive application of certain modifications to farming losses
  • Section 225 – Oversight and audit reporting

TITLE III – SUPPORTING PATIENTS, PROVIDERS, OLDER AMERICANS, AND FOSTER YOUTH IN RESPONDING TO COVID–19

SUBTITLE A – PROMOTING ACCESS TO CARE AND SERVICES

  • Section 301 – Maintaining 2021 Medicare part B premium and deductible at 2020 levels consistent with actuarially fair rates
  • Section 302 – Improvements to the Medicare hospital accelerated and advance payments programs during the COVID–19 public health emergency
  • Section 303 – Authority to extend Medicare telehealth waivers
  • Section 304 – Extending Medicare telehealth flexibilities for Federally qualified health centers and rural health clinics
  • Section 305 – Temporary carryover for health and dependent care flexible spending arrangements
  • Section 306 – On-site employee clinics
  • Section 307 – Support for older foster youth
  • Section 308 – Court improvement program

SUBTITLE B – EMERGENCY SUPPORT AND COVID-19 PROTECTION FOR NURSING HOMES

  • Section 311 – Definitions
  • Section 312 – Establishing COVID–19 strike teams for nursing facilities
  • Section 313 – Promoting COVID–19 testing and infection control in nursing facilities
  • Section 314 – Promoting transparency in COVID–19 reporting by nursing facilities
  • Section 315 – Funding

TITLE IV – ADDITIONAL FLEXIBILITY AND ACCOUNTABILITY FOR CORONAVIRUS RELIEF FUND PAYMENTS AND STATE TAX CERTAINTY FOR EMPLOYEES AND EMPLOYERS

  • Section 401 – Expansion of allowable use of Coronavirus Relief Fund payments by States and Tribal and Local Governments
  • Section 402 – Accountability for the disbursement and use of State or government relief payments
  • Section 403 – State tax certainty for employees and employers

The 168-page text of Chairman Grassley's proposed bill is posted here. A 12-page section-by-section summary is posted here.

​Also today, Sens. Marco Rubio (R-FL) and Susan Collins (R-ME) released their portion of the HEALS Act that focuses on small businesses and the Paycheck Protection Program (PPP), which offers forgivable loans to certain small businesses to keep workers on the payroll. The legislative text and bill summary are posted.

In a press release issued today, Sen. Rubio explained the bill's major provisions in the following excerpt:

  • Long-term Recovery Sector Loans: Create a guaranteed long-term, low-interest working capital product by improving the terms of 7(a) loans for seasonal businesses and businesses located in low-income communities. The loans would equal two times the borrowers’ annual revenues, up to $10 million, with a maturity of up to 20 years at an interest rate that is fixed at one percent to the borrower. The bill would allow businesses with 500 employees or fewer and have seen their revenues decline by 50 percent or more in the first or second quarter this year compared to the same quarter last year. 
  • PPP Second Draw Loans: Provide funds to allow the hardest-hit small employers – those that have seen their revenues decline by 50 percent or more in the first or second quarter this year compared to the same quarter last year – to receive a second PPP loan. The bill would limit these second forgivable loans to entities with 300 or fewer employees and create an additional set aside of funds for businesses with 10 or fewer employees to ensure equitable access to forgivable loans. The bill includes a $10 billion set aside for community lenders to access second draw funds. 
  • PPP Programmatic Improvements: Allow businesses to utilize forgivable PPP funds for personal protective equipment for workers, adaptive investments needed for businesses to operate safely amid the COVID-19 pandemic, and additional expenses. It would also simplify the forgiveness application and documentation requirements for smaller loans under $150,000. Additionally, it would further expand eligibility to chambers of commerce and destination marketing organizations with 300 employees or fewer as well as favorable loan calculations for farmers and ranchers.
  • Small Business Growth and Domestic Production Investment Facility: Provides for the provision of $10 billion in long-term debt with equity features to registered SBA Small Business Investment Companies (SBICs) that invest in small businesses with significant revenue losses from COVID-19, manufacturing startups in the domestic supply chain, and in low-income communities. Establishes return participation for the SBA in order to recoup the one-time cost of the investment.

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