President Trump has signed the landmark legislation on March 27, 2020 that includes a $2-trillion stimulus package to provide a safety net to the struggling U.S. economy due to the the coronavirus pandemic.
The stimulus package is the largest emergency aid package in US history and the most significant legislative action taken to address the rapidly intensifying coronavirus crisis, which has resulted in the economy coming to a screeching halt. Here is the full text of the bill. Here are the 4 key provisions in the law:
1. Taxpayers will receive direct payments from the federal government.
The legislation provides $1,200 in direct payments to individuals with annual incomes of up to $75,000 and married couples earning up to $150,000 receiving $2,400. For individual income earners over $75,000, or married couple over $150,000, the payments will lessen by income and end altogether for those earning more than $99,000, or $198,000 for a married couple. Someone filing as “head of household” would get the full payment if they earn $112,500 or less. Families also receive an additional $500 per child age 16 or under.
Income is based on year 2019. Your adjusted gross income is on line 8b of the 2019 1040 federal tax return. If you haven’t filed your 2019, use your 2018 return. You do not need to apply to receive payment. If the IRS has your bank account information, you will receive a direct deposit within the next 3 weeks.
There will be only one payment. Though, future bills could order additional payments.
2. Unemployment payments will increase substantially, and include many more Americans.
Lawmakers agreed to a significant expansion of unemployment benefits.
The legislation increases unemployment payments by $600 per week for up to 4 months. It also extends the total unemployment benefits by 13 weeks (for a total of 39 weeks in Ohio). The increased pay would only apply for the first 4 months.
The bill also broadened who can be obtain unemployment benefits, and would include freelancers, self-employed, contractors, furloughed employees and gig workers, such as Uber drivers and work-out class trainers.
If you rely on a school, day care or other facility to care for your child, elderly parent or household member so that you can work and that facility has been shut down because of coronavirus you would be eligible for unemployment benefits.
Individuals that have been diagnosed with Covid-19 and those who are required to self-quarantine would be covered. The bill also says that individuals who are unable to get to work because of a quarantine imposed as a result of the outbreak would also be eligible.
Workers who are able to work from home, and those receiving paid sick leave or paid family leave would not be covered.
To apply for unemployment benefits in Ohio:
- Online: File online at unemployment.ohio.gov 24/7
- Phone: Call 1-877-644-6562 or 614-387-8408 M-F 8 a.m.-5 p.m.
3. Small businesses can get emergency loans if they meet certain requirements.
For companies with 500 employees or less, the Paycheck Protection Program will distribute $350 billion to small businesses that can be partially forgiven if the company meets certain requirements.
Businesses can receive loans up to $10 million, dependent on how much the company paid its employees – see below for more. The loans will carry an interest rate up to 4%.
If the employer uses the funds for the approved purposes and maintains the average size of its full-time workforce based on when it received the loan, the principal of the loan will be forgiven, meaning the employer would only need to pay back the accrued interest. A loan made under the SBA’s Disaster Loan Program on or after January 31, 2020, may be refinanced as part of a covered loan under this new program.
Loan amounts (capped at $10 millions) are calculated based on:
- -2.5 times average total monthly payroll costs incurred in the one-year period before the loan is made (or for seasonal employers the average monthly payroll costs for the 12 weeks beginning on February 15, 2019, or from March 1, 2019 to June 30, 2019);
- -PLUS the outstanding amount of a loan made under the SBA’s Disaster Loan Program between January 31, 2020 and the date on which such loan may be refinanced as part of this new program;
Borrowers will need to make a good faith certification that:
- -The loan is necessary to continue operations during the coronavirus emergency;
- -Funds will be used to retain workers & maintain payroll, make mortgage, lease, and utility payments;
- -The borrower does not have any other application pending under this program for the same purpose; and
- -From February 15, 2020 until December 31, 2020, the borrower has not received duplicative amounts under this program.
The funds may, in addition to the uses already allowed under SBA’s Business Loan Program, use the loans for:
- -Payroll Costs – employee compensation and benefits, such as health insurance. There is a maximum of $100,000 of compensation, prorated for the covered period, per employee.
- -Interest payments on mortgage obligations.
- -Rent payments
- -Interest on any other debt incurred before the covered period.
Loan Forgiveness and Payment Deferral
Companies that were operating on February 15, 2020 and have pending or approved loans under the program are entitled to complete payment deferment for principal, interest and fees.
The loan is forgiven and excluded from gross income in an amount equal to the following costs incurred and payments made during the covered period: payroll costs; interest payments on mortgages; rent; and utility payments.
However, if there are employee cuts or reductions in employee wages, forgiveness amounts will be reduced as follows:
a. employee reduction:
maximum available forgiveness under the rules described above multiplied by: Average number of full-time equivalent employees (FTEEs) per month – calculated by the average number of FTEEs for each pay period falling within a month – during the covered period divided by:
Either (at election of the borrower) –
- -Average number of FTEEs per month employed from February 15, 2019 to June 30, 2019; or
- -Average number of FTEEs per month employed from January 1, 2020 until February 29, 2020;
b. reduction in wages:
a reduction by the amount of any reduction in total wages of any “employee” during the covered period that is greater than 25% of the employee’s wages during the employee’s most recent full quarter of employment before the covered period. For purposes of this section only, “employee” is limited to any employee who did not receive during any single pay period during 2019 a salary at an annualized rate of pay over $100,000.
If an employer has already made employee cuts or reduced wages, the employer can avoid reduction penalties if the employees are rehired and/or reduced wages are eliminated by June 30, 2020.
Employee Retention Credits
Employers carrying on business in 2020 will receive a refundable credit against payroll tax liability (social security) equal to 50% of the first $10,000 in wages per employee if:
a. business operations have been fully or partially suspended due to orders from a governmental entity; or
b. Experience a year-over-year (comparing calendar quarters) reduction in gross receipts of at least 50% – until gross receipts exceed 80% year-over-year
4. Distressed states, municipalities, and companies can receive bailouts — but with strings attached.
Loans for distressed states, municipalities, and eligible companies would come from a $500 billion fund controlled by the Federal Reserve. The proposal specifically states that the Trump family of businesses will not be entitled to the loans. There are stock buy-back restrictions and executive compensation restrictions attached to these loans. These loans will not be forgiven.