H.R. 748, THE CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY (CARES) ACT

 (SUMMARY WITH RESPECT TO A FEW ITEMS)

Click Here to View Bill: https://www.congress.gov/bill/116th-congress/house-bill/748

Assistance to American Workers and Families:

2020 Recovery Rebates

·         Approximately $250 billion in “recovery rebates” for qualifying taxpayers in the following manner:

o    For individuals making less than $75k – a direct payment of $1,200 (phases out at $99k).

o    For couples making less than $150k – a direct payment of $2,400 (phases out at $199k).       

§  Also entitled to $500 per eligible child.

o    Must provide Social Security Numbers (SSN) for each family member claiming a rebate.

o    Rebates fully available to residents of U.S. Territories, including Puerto Rico.

o    Rebates to be paid out as advance refunds (in the form of checks or direct deposit) on the basis of taxpayers’ 2019 returns (or tax year 2018, if a 2019 return has not yet been filed).

Unemployment Compensation

·         $250 billion in unemployment insurance funding for variety of unemployment benefits as follows:

o    Creates a temporary Pandemic Unemployment Assistance program through 12/31/2020 to provide payments to individuals not traditionally eligible for unemployment benefits (self-employed, including gig workers and independent contractors, etc.).  Would be state administered but federal funded.

o    Provides an additional $600 per week to each recipient of unemployment insurance or Pandemic Unemployment Assistance – for up to 4 months. 

o    Provides funding – through 12/31/2020 – to pay the cost of the first week of unemployment benefits for states that choose to pay recipients as soon as they become unemployed.

o    Provides an additional 13 weeks of unemployment benefits through 12/31/2020 to assist those for whom state unemployment benefits may have ended – including recipients of Pandemic Unemployment Assistance.

Short-time Compensation Programs

·         Provides funding to support existing state “short-time compensation” programs (where employers reduce employee hours instead of resorting to layoffs).

o    Employees with reduced hours would receive a pro-rata unemployment benefit and funding through this provision would reimburse 100% of the costs incurred through 12/31/2020.

·         Also provides funding for states that enter into agreements with the Department of Labor to enact a “short-time compensation” plan, and would reimburse 50% of the costs that a state incurs under the plan through 12/31/2020.

·         Creates a $100 million grant program to be provided to states for the purpose of implementing or improving a short-time compensation program.

Retirement Provisions

·         Waives the 10% early withdrawal penalty for distributions up to $100k from qualified retirement accounts for Coronavirus-related purposes made on or after 1/1/2020.

o    Income attributable to such distributions subject to tax over 3 years.

o    Taxpayer may recontribute the funds to an eligible retirement plan within 3 years without regard to that year’s cap on contributions.

o    A Coronavirus-related distribution is one that is made to an individual:

§  Who is diagnosed with COVID-19;

§  Whose spouse or dependent is diagnosed with COVID-19, or

§  Who experiences adverse financial consequences due to quarantine, furlough, layoff, reduced work hours, childcare issues, business closure or reduced business hours of business owned or operated by the individual (and any other as determined by Treasury).

·         Provides flexibility for loans from certain retirement plans for Coronavirus-related relief.

·         Temporary RMD Waiver – RMDs for 2020 are waived for 2020 for all types of DC plans (including 401(k), 403(b), and governmental 457(b) plans) and IRAs. This also applies to RMDs due in 2020, but attributable to 2019.

Charitable Contributions

·         Allows for a partial above-the-line deduction of up to $300 of cash contributions for individuals whether they itemize or not.

·         Increases the limitation on deductions for charitable contributions for individuals and corporations:

o    For individuals – the 50% of AGI limitation is suspended for 2020.

o    For corporations – the 10% limitation is increased to 25% of taxable income.

o    Also increases the limitation on deductions for contributions of food inventory to 25%.

Employer Payment of Student Loans

·         Allows employers to provide a student loan repayment benefit to employees on a tax-free basis.

o    Allows annual contributions of up to $5,250 from the employer towards an employee’s student loans – with the payments excluded from the employee’s income.

Credit Protection During COVID-19

·         Requires furnishers to credit reporting agencies, who agree to account forbearance or modified payments with respect to an obligation/account of a consumer impacted by COVID-19, to report such obligations as “current” or as the status reported prior to the account forbearance or modification. 

·         Applies to accounts for which the consumer has fulfilled requirements pursuant to the forbearance or modified payment agreement.

·         Such credit protection is available beginning January 31, 2020 and ends at the later of 120 days after enactment or 120 days after the date the national emergency declaration related to the Coronavirus is terminated.

Foreclosure Moratorium and Consumer Right to Request Forbearance

·         Allows a borrower with Federally-backed mortgage loan who is experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency – to request a forbearance of that mortgage loan – regardless of delinquency status.

o    Initial forbearance period shall be granted for up to 180 days and can be extended for an additional 180 days at borrower’s request (the initial and extended periods can also be shortened at the borrowers request).

·         During forbearance period – no fees, penalties, or interest (beyond the amounts scheduled or calculated as if the borrower made all payments on time and in full) are allowed.

·         Only documentation required is the borrower’s attestation to a COVID-19 financial hardship.

·         With exception for vacant or abandoned property – a servicer of a Federally-backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, or move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60 day period beginning on 3/18/2020.

Forbearance of Residential Mortgage Loan Payments for Multifamily Properties with Federally-backed Loans

·         Allows multifamily property borrower with Federally-backed multifamily mortgage loan that was current as of 2/1/2020 to submit an oral or written request for forbearance to its servicer:

o    Must affirm that the borrower is experiencing a financial hardship due to COVID-19.

o    Forbearance period – initial forbearance period is for 30 days, but can be extended for up to 2 additional 30 day periods (so long as requested at least 15 days prior to end of forbearance period).

·         For renters:

o    May not be evicted during the forbearance period (nor may an eviction be initiated) for non-payment of rent – nor may any late fees, penalties or other charges be assessed.

o    Limitations on notices to vacate.

Temporary Moratorium on Eviction Filings

·         During 120-day period beginning on date of enactment, the lessor of covered dwelling may not initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent.

o    Covered dwelling is one that is occupied by a tenant per a residential lease, or without a lease or with a lease that is terminable under State law – and includes houses.

·         Lessors also may not issue a notice to vacate a covered dwelling until after the expiration of the 120-day period.

·         Look to definitions regarding covered dwellings and covered property – for applicability of provision.

Student Loan Payment

·         Provides for the Secretary of Education to suspend all payments due for federal student loan borrowers with federally-held loans (Direct and FFEL loans that are held by U.S. Dept. of Education).

o    No payments required on the loan through September 30, 2020 on outstanding principal or interest.

o    Interest will not accrue on such loans during this period.

o    Prohibits collection efforts during suspension period, and protects from negative credit reporting.

o    Requires notice to borrowers (starting in August) of the resumption of their loan payment obligation.

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