White House and Congress Remain Deadlocked on COVID Relief Legislation
Negotiations between the White House and Congress on a “Phase 4” COVID relief bill are at a standstill as Democrats and Republicans remain far apart on the major details of the agreement. House Democrats are seeking a relief package in the neighborhood of $3 trillion while Senate Republicans do not want to go above the $1 trillion proposal they released at the end of July.
Both sides remain far apart on employer liability protections, emergency supplemental unemployment benefits and financial aid to state and local governments. The White House and congressional Republicans are seeking robust liability protections in any Phase 4 package and support efforts to reduce the now-expired $600 per week supplemental unemployment benefit to $200. Democrats would like to see the supplemental unemployment benefit remain at $600 and boost funding for state and local governments by $1 trillion, both non-starters for Republicans. There appears to be general agreement by both sides on extending small business loan programs in some form.
Both the House and Senate are now on August recess but have told to be ready to return to Washington, D.C. within 24 hours should an agreement be reached. BSCAI sources indicate that a final bill is unlikely to be passed until September following the presidential conventions. The Senate is slated to return on September 8 while the House will be back on September 14.
For questions, contact Kevin McKenney at kmckenney@bscai.org.
President Trump Takes Executive Action on COVID Relief Measures
President Trump recently took executive action on several economic relief measures as discussions with Congress on a “Phase 4” package continue to lack progress. The actions range from an extension of reduced unemployment benefits to a payroll tax deduction. Some of the details will need federal agency guidance to implement, but below are initial details of these actions:
Extended Unemployment Benefits
President Trump signed an executive order extending supplemental unemployment benefits at a reduced amount of $400. The $600 supplemental benefit authorized by the CARES Act expired on July 31.
Payroll Tax Deduction
President Trump signed a directive deferring payroll taxes for those earning $100,000 per year or less through the end of 2020.
Outlook
These actions will likely see legal challenges as many have indicated that only Congress has the authority to initiate changes to revenue sources.
DOL Announces Implementation of Presidential Order on Supplemental Unemployment Insurance
Last week, the Department of Labor (DOL) announced the release of guidance to help states implement the Lost Wages Assistance (LWA) program. The LWA carries out the executive order signed by President Trump on August 8 which provides claimants in most Unemployment Insurance (UI) programs up to $400 per week in additional benefits, starting with weeks of unemployment ending on or after Aug. 1, 2020, and ending Dec. 27, 2020 at the latest. LWA will be administered by states and territories through a grant agreement with the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) and with support from the Labor Department.
LWA is funded by FEMA through a joint federal-state agreement and provides the states with two benefit options. For the $400 per week benefit, states must contribute 25 percent ($100) and the federal government will cover 75 percent of the cost ($300). States are encouraged to satisfy the 25 percent state match requirement and provide the additional $100 in benefits either through allocations of the state’s Coronavirus Relief Funds (CRF), provided under Title V of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136) or other state funding. For the $300 per week benefit, FEMA will fund the entire amount and states may choose to simply satisfy the 25 percent state match, without allocating additional state funds, with the state funding used to pay regular state UI unemployment benefits.
There remain questions surrounding the legality of President Trump’s executive action to extend supplemental unemployment insurance.
SBA Releases Guidance on PPP Loan Review Appeal Process
The Small Businesses Administration (SBA) recently issued an interim final rule which informs Paycheck Protection Program (PPP) borrowers and lenders of the process for a PPP borrower to appeal certain SBA loan review decisions to the SBA Office of Hearings and Appeals (OHA). As a reminder, the SBA has announced its intention to review all PPP loans above $2 million.
The rule also outlines circumstances in which borrowers may request appeals. For example, only final SBA loan review decisions (as defined in the interim rule) can be appealed to OHA. A PPP borrower cannot directly file an OHA appeal of any decision made by a lender concerning a PPP loan. However, a PPP borrower can request an SBA review of a lender decision to deny the borrower’s loan forgiveness application.
SBA Releases Guidance on PPP Loan Forgiveness
The Small Business Administration (SBA), in consultation with the Treasury Department, recently issued guidance to address frequently asked borrower and lender questions concerning forgiveness of Paycheck Protection Program (PPP) loans. The FAQ guidance document can be accessed here.
Borrowers may rely on the guidance provided in this document as the SBA’s and Treasury Department’s interpretation of the CARES Act, the PPP Flexibility Act, and the PPP Interim Final Rules.
DOL Releases Additional Guidance on COVID-19 Workplace Protections and Paid Leave
The U.S. Department of Labor has published additional guidance for workers and employers on how the protections and requirements of the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Families First Coronavirus Response Act (FFCRA) affect the workplace as workplaces reopen amid the COVID-19 pandemic. The guidance from the Department’s Wage and Hour Division (WHD) includes commonly asked questions and answers that address critical issues in all three laws.
These new FAQ guides can be found here:
This guidance is the latest addition to compliance assistance materials the WHD has published. These materials include a Fact Sheet for Employees, a Fact Sheet for Employers and a Questions and Answers resource about paid sick and expanded family and medical leave under the FFCRA. WHD has also produced two guidance posters, one for federal workers and one for all other employees, that fulfill notice requirements for employers obligated to inform employees of their FFCRA rights; Questions and Answers about posting requirements; and simple Quick Benefits Tips to determine how much paid leave the FFCRA allows workers to take.
IRS Issues Guidance on Recapturing Excess Employment Tax Credits
The IRS has issued guidance through temporary and proposed regulations relating to the recapture of erroneously issued employment tax credit refunds under both the Families First Coronavirus Response Act (Families First Act) and Coronavirus Aid, Relief and Economic Security Act (CARES Act).
The IRS has revised or is in the process of revising the Form 941, Form 943, Form 944 and Form CT-1, so that employers may use these returns to claim the paid sick and family leave and employee retention credits.
Employers may also receive advance payment of the credits up to the total allowable amounts. The IRS has created Form 7200, Advance Payment of Employer Credits Due To COVID-19, which employers may use to request an advance of the credits. Employers are required to reconcile any advance payments claimed on Form 7200 with total credits claimed and total taxes due on their employment tax returns.
Any refund of these credits paid to a taxpayer that exceeds the amount the taxpayer is allowed is an erroneous refund. The regulations released today authorize the assessment and collection of any erroneous refund of the credits in the normal course of processing the applicable employment tax returns or Forms 7200. This allows the IRS to efficiently recover any refund, while preserving administrative protections for taxpayers.