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Economic Development

Posted on: April 2, 2020

FEDERAL CORONAVIRUS AID RELIEF AND ECONOMIC SECURITY (CARES) ACT

FM

  • Provides $3.5B for child care assistance to States for the Child Care and Development Block Grant program (CCDBG) and expands the program to include child care assistance for workers deemed essential during the response to Covid-19.
  • Creates a $349B ‘Paycheck Protection Program’ that provides federal government loan forgiveness (under Small Business Administration (SBA) Section 7(a) loans) for small businesses to pay up to eight weeks of utility bills (including electric, telephone, and internet), mortgage interest and rent, and payroll costs, among other uses.
  • Creates a $10B program through SBA to provide grants of up to $10,000 to small businesses (no more than 500 employees) to maintain payroll and pay rent or mortgages, among other uses. Electric cooperatives with under 500 employees may be eligible for this program.
  • Clarifies payment limitations for the newly mandated FMLA/sick leave requirements.  Limits emergency paid FMLA leave to $200 per day and $10,000 in the aggregate for each employee.  Limits emergency paid sick leave to $511 per day and $5,110 in the aggregate or more than $200 per day and $2,000 in the aggregate to care for a quarantined individual or child for each employee under this section.
  • Waives the 10% early distribution penalty for 401(k) and IRA withdrawals up to $100,000, and certain loan flexibility for “coronavirus-related distributions” and waives required minimum distributions for 2020.
  •  Provides a refundable tax credit, tied to the payment of wages by employers during the COVID-19 crisis.  Eligible employers would be permitted to claim a 50% credit on wages up to $10,000 per employee.
  • Allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax with respect to their employees.
  • Temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30 percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020. This could affect members with taxable subsidiaries and G&Ts that have off-system sales.

 


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