The Next Phase of Economic Relief

As the COVID-19 pandemic continues, Congress has introduced a number of additional economic relief bills to help Americans.  Late last month, Senate Republicans introduced the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act followed by the Coronavirus Assistance for American Families (CAAF) Act. The House led Democrats passed the Heroes Act in May.  They are likely to meet somewhere in the middle with the goal of getting another round of stimulus checks out to Americans and extending unemployment benefits.  Congress has until August 7 to come to an agreement before a month long recess.

Next Round of Stimulus

The HEALS Act proposes another round of stimulus similar to the model in CARES Act but with no age limit for who qualifies as a dependent. The CARES Act provided payments of up to $1,200 per adult and $500 for dependents up to age 16. The Heroes Act also aims to provide additional benefits to those with dependents. It would give up to $1,200 per adult, and $1,200 per dependent with a maximum of three.

The CAAF Act seeks to give a $1,000 payment to both taxpayers and their dependents. Dependents include both children and adult dependents with social security numbers.  The idea is to provide families with children greater assistance. 

Each of the proposals uses the same income limits as the first round of stimulus payments. Taxpayers with an AGI over $75,000 (single), $112,500 (heads of household), and $150,000 (married filing jointly) in the 2018 or 2019 tax year would see their stimulus payments reduced by $50 for every $1,000 above the thresholds.

Enhanced Unemployment Benefits

Under the CARES Act, the PEUC (Pandemic Emergency Unemployment Compensation) provided an additional $600 per week in unemployment benefits, which expired July 31.  Both Republicans and Democrats want to extend the PEUC, but the amount that will be extended is a point of contention between them.

The HEALS Act would provide an additional benefit of $200 per week through September. Starting in October, a supplement would be provided that would replace up to 70% of lost wages through the end of the year.  The HEROES Act would continue the current benefit of an additional $600 per week through the end of the year.  

Payroll Protection Program

Originally a part of the CARES Act, the program was designed so businesses would be able to keep employees on payroll.  The program has already been expanded once under the Paycheck Protection Program Flexibility Act. 

The program would be further extended by the HEALS Act and would target the small businesses that were hit the hardest.  The HEALS Act would provide an additional $190 billion to support additional PPP loans, but the loans would be restricted to firms with fewer than 300 employees that have experienced at least a 50 percent reduction in gross revenues.  Qualifying businesses would be able to take out a second loan equal to 2.5 times total monthly payroll costs up to $2 million. Loans would continue to be forgivable if at least 60 percent of the loan is used to cover payroll costs.

Employee Retention Credit

This refundable tax credit reduces the FICA tax owed by businesses and was designed to help them keep employees on payroll. Both the Heroes Act and HEALS Act would expand the credit to include a greater amount of wages. Currently capped at $5,000 per employee, the Heroes Act would cap the credit at $36k per employee, while the HEALS Act would cap it at $30k.

The HEALS Act would expand the qualifying employee threshold to 500 employees or less. Additionally, businesses would also be able to qualify for both a forgivable PPP loan and the ERC; however, provisions would be put in place to prevent using both benefits for the same payroll costs.

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While the final outcome of these additional economic relief measures remains yet to be seen, at the very least, we can expect there to be some measure of support for Americans and owners of small businesses. We hope that the additional economic relief will help stem the tide so that Americans can feel a bit more at ease for the near and distant future.  As always, keep an eye on our blog for any further developments.