American Bus Association



Coronavirus Aid, Relief and Economic Security Act(Enacted March 27, 2020)DIVISION A – KEEPING WORKERS PAID AND EMPLOYED, HEALTH CARE SYSTEM ENHANCEMENTS, AND ECONOMIC STABILIZATIONTITLE I – KEEPING AMERICAN WORKERS EMPLOYED AND PAID ACT- Paycheck Protection Program (§1102) - establishes a loan program under SBA’s section 7(a) (through private lenders approved by SBA), at 100% fed share, for small businesses keep workers employed. If funds are used for payroll, benefits etc, then loan may be forgiven. Provides an aggregate of $349B for the program- Eligibility: any business concern that employs 500 employees (includes independent contractors and sole proprietorships); also allows special treatment for certain small businesses that have multiple locations (ie hotels and restaurants). Had to be in business before Feb. 15, 2020.- Uses: payroll costs, benefits, leave, mortgage/rent payments, utilities and debt expenses.- $10M loan limit, amount of a business’s eligibility is tied to company’s payroll: amount can be up to 2.5 times the borrower’s average monthly payroll costs, not to exceed $10M (the amount is intended to cover 8 weeks of payroll). The 8-week period may be applied any time frame between Feb. 15 and June 30, 2020.- waives the SBA requirement of showing that “credit is not available elsewhere”; and need to put up collateral to secure it.- no double-dipping under disaster loan program; but can refinance an EIDL loan under this program. Also, if you take a loan under this program, not eligible for employee retention credit from IRS, under separate provisions of the CARES Act.- maximum loan term by law was 10 years, but Treasury/SBA has set 2-yr terms, with a cap on interest at 0.50% for amounts not covered by forgiveness section; payments are deferred for 6 months, although interest will accrue.- authority for Administrator & Treasury Secretary to expand SBA’s list of financial institutions, to participate in program.- Loan Forgiveness (§1105)- if used for payroll, interest/principle on mortgage, rent, utilities, the loan may be forgiven. The amount of forgiveness is equal to the amount spent during the 8-week period beginning on the date of origination of the loan, on payroll, mortgage interest, rent on a leasing agreement, and utilities.- the loan forgiveness can be reduced if there is a reduction in staff, or reduction of 25% or more in wages.- Reductions in staff or wages that occur during Feb. 15 - June 30, shall not decrease the forgiveness IF the employer eliminates the reductions (i.e. rehires). - Of the amount to be forgiven, it shall be forgiven at the end of the 8-week period after you take out the loan. - Disaster Assistance or EIDL Grants (§1110)- expands eligibility of this program to small start-ups, sole-proprietor ships, contractors and co-ops; also provides an “advance” of up to $10K, for expediency. ABA Website for sources: II – ASSISTANCE FOR AMERICAN WORKERS, FAMILIES AND BUSINESSES- SUBTITLE A – Unemployment Insurance Provisions- Pandemic Unemployment Assistance (§2102) – - establishes a temporary unemployment benefits program for people not usually eligible for unemployment, including, among others, due to business being closed as a result of COVID-19 and for those who exhausted traditional benefits.- covers period of 1/27/20 – 12/31/20 – all or partial unemployment during this time. Provides for retroactive eligibility.- benefit is determined by state unemployment benefits law, but not less than provided in this act; and waives traditional waiting period.- Program to be managed by DOL- Emergency Increase (§2104) – - Enables states/DOL to increase state law weekly unemployment benefits by $600, a pandemic “bonus,” for up to 4 months. DOL will reimburse states. Appropriated “such sums as necessary.” State/DOL agreements are to end on 7/31/20. - Prompt Payment First Week (§2105)- Funds states to pay the cost of benefits through December 31, 2020 for states that choose to pay recipients as soon as they become unemployed instead of waiting one week before the individual is eligible to receive benefits. - Pandemic Emergency Unemployment Compensation (§2107) - Enables states to provided unemployment benefits to those who have already exhausted their eligibility, for an additional 13 weeks, up to Dec 31, 2020; state must set up an account for individual, with 13x the individual’s average weekly benefit amount (to include the §2104 bonus). - Short-term Compensation Programs (§§2108, 2109, 2110) - - Provides funding to states for “short-time compensation” programs, where employers reduce employee hours instead of laying off workers and employees with reduced hours receive a pro-rated unemployment benefit – if states have established a short-time program (see IRS rules). Would cover 100% of costs employers incur for providing short-time compensation through Dec 31, 2020. If state sets up program now, DOL will reimburse 50% of costs through Dec 31, 2020 – and provides $100 million to help states establish program. - SUBTITLE C – Business Provisions- Employee Retention Credit (§2301) – - Provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through Dec. 31, 2020.- Delay of Employer Payroll Taxes (§2302)- allows employers to delay payment of social security payroll taxes, and self-employed to delay paying ? of social security employment taxes. Half of the deferred taxes become due at end of 2021 and the other half at the end of 2022. - Modifications for net operating losses (§2303)- allows businesses to carry back losses to any of the last five years and raises the limit for deducting the business interest expense from 30% to 50%. (temporarily suspending 2017 Act provisions.) - should enable businesses w/NOLs to immediately access funds by getting refunds of previously paid income taxes. The 5-year carryback period is important because it allows carry backs of NOLs to tax years when the corporate tax rate was 35% and the individual tax rate was higher than the current rates. - Modifications of limitation on losses for taxpayers other than corporations (§2304) - delays application of the limitation on the amount of business losses an individual can deduct against other income for tax years beginning in 2018, applicable to non-corporate taxpayers until 2021 (2017 Act imposed the initial limitation). - Modification of credit for prior year minimum tax liability of corporations (§2305)- Accelerates the refund of alternative minimum tax (AMT) credits over the 2018 and 2019 period. (The 2017 Act repealed the corporate AMT and allowed refund of previously-paid AMT credits over 2018 through 2021 period.- Modifications of Limitations on Business Interest (§2306) - The 2017 Act generally limited the deductibility of business interest expense to 30% of adjusted taxable income (i.e., taxable income determined without regard to deductions for interest, depreciation or amortization (EBIDA)). The limitation did not apply to businesses with gross receipts less than $25 million. For 2019 and 2020, the interest limitation is increased to 50% of adjusted taxable income. For 2020, businesses may elect to use the adjusted taxable income from 2019. This election should be beneficial as 2020 income likely will be less than 2019 income. Special rules apply to partners and partnerships that would allow partners to deduct, in 2020, a greater amount of interest expense from the partnership.- Technical Amendments Regarding Qualified Improvement Property (§2306)- enables businesses, especially in the hospitality industry, to write off immediately costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building. It corrects an error in the Tax Cuts and Jobs Act, and not only increases companies’ access to cash flow by allowing them to amend a prior year return, but also incentivizes them to continue to invest in improvements as the country recovers from the COVID-19 emergency.TITLE III – SUPPORTING AMERICA’S HEALTH CARE SYSTEM IN THE FIGHT AGAINST THE CORONAVIRUS- SUBTITLE C- Labor Provisions - Limitations on Leave (3601 & 3602) – - Modifies limits on amount of pay employer must cover for sick leave established in 2nd package; see DOL Fact sheet: - Paid Leave for Rehired Workers (3605) -Makes provision for employers to provide leave for rehired workers as of 1, 2020.Title IV—ECONOMIC STABILIZATION AND ASSISTANCE TO SEVERELY DISTRESSED SECTORS OF THE U.S. ECONOMY - SUBTITLE A - Coronavirus Economic Stabilization Act of 2020 - Loan Program for Distressed Businesses (Emergency Relief & Taxpayer Protections (§4003))- Creates a loan program, to be administered by Treasury Secretary, for passenger and cargo airlines and other businesses, states and municipalities - Aggregate funding of $500B, for eligible businesses, as follows:1. $25B – airline carriers of passengers2. $4B – airline carriers of cargo3. $17B – for businesses critical to maintaining national security (Boeing)4. $454B (and any leftover from above) – to make loans to programs or facilities established by Fed. Reserve for purpose of providing liquidity to businesses, states or municipalities, by purchasing obligations or making loans or other advances secured by collateral. - Terms of program are left to Treasury Secretary, who sets interest rate. - Restrictions on loans to airlines & national security businesses (1-3): max 5-year loan term, businesses restricted from stock buy-backs 1-yr after loan repaid, restricted on paying dividends for 1-yr after loan is paid, must maintain employment levels as of March 24 or not reduce by 10%, must be U.S. company, and proceeds must be used to cover losses such that continuity of operations are jeopardized. - For loans from Federal Reserve entities (4): eligible businesses must agree to: 1-yr post loan payoff restriction on stock-buys and paying dividends; and comply with restrictions on compensation levels; and must be a U.S. based company.- to protect taxpayers, normal Fed Rules apply to loans and loan products-Mid-Sized Businesses – Special program – Secretary shall seek a program/facility to make direct loans to 500-10K employee businesses; limiting the interest rate to 2%; deferred payments for initial 6 months, which Secretary can extend. Businesses must certify: economic uncertainty makes necessary the loan; funds used to retain 90% of workforce at full compensation & benefits till 9/30/20; business intends to restore not less than 90% of workforce in place as of 2/1/20, with pay & benefits, no later than 4 months after termination of emergency declaration; be a U.S. domiciled business; not in bankruptcy; will not pay dividends or do stock buy backs during term of loan; will not abrogate any existing labor agreements during or for 2-yr period post loan payoff; and remain neutral in labor organizing effort. - Fed Reserve may also set up a “Main Street Lending Program” to assist small and mid-sized businesses.- States & Municipalities – Secretary shall seek programs/facilities to support lending to states & municipalities.- No loan forgiveness- Limitations on Employee Compensation (§4004)- ensures loan funds will not be used to pay salaries of “highly compensated employees”- SUBTITLE B – Air Carrier Worker Support - Relief for Aviation Workers (4112) - Grant Program: creates a grant program under Secretary of Treasury to pay employee wages, salaries and benefits to airlines (passengers and cargo) and contractors.-$25B for grants to passenger airlines-$4B for grants to cargo airlines-$3B for grants to contractors- Procedures (4113) - Treasury Secretary must establish procedures etc. w/i 5 days of - enactment, and start making payments w/i 10 days.- Required Assurances – Labor Protections (4114, 4115)- to receive assistance, the carrier/contractor must cease furloughs, and pay and benefit cuts; no stock buy-backs; not pay dividends; must maintain scheduled service. Authority of provision sunsets on March 1, 2022.- eligibility for financial assistance will not be conditioned on a carriers/contractors actions to enter into labor negotiations.- Limitation on Compensation (4116)compensated employees, restriction in place from 2-yrs beginning March 24, 2020.- Tax Payer Protection (4117)- Treasury can take a stake in carriers/contractors to compensate government. DIVISION B – EMERGENCY APPROPRIATIONS FOR CORONAVIRUS HEALTH RESPONSE AND AGENCY OPERATIONS (SUPPLEMENTAL APPROPRIATIONS)TITLE XII – DEPARTMENT OF EDUCATION- Education Stabilization Fund – provides $30.75B to remain available through Sept 30, 2021.- Provides funding to states to be distributed to local educational agencies, based established formula, to be used for school operations to prepare to carry on educational activities while the virus/restrictions continue.- Provision is made for these funds, to the extent practicable, to be used to pay employees and contractors (and this is not limited to bus contractors).TITLE XII – DEPARTMENT OF TRANSPORTATION- Essential Air Service – an additional $56M, to standard program- Airports - $10B in additional grants-in-aid to airports, $100M set aside for GA airports (all grants at 0% cost share - Fed pays 100%)- FMCSA - $150K, of obligation authority to address their safety programs- Public Transit - $25B, to be apportioned between 5307 and 5311 programs, per current law; funds from General Fund (not HTF); for operational expenses in response to COVID-19, at 100% Federal share (0% match). - AMTRAK - $492M in grants for the Northeast Corridor service; and an additional $526M for the remainder of AMTRAK’s network ................
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