Congress Responds – A First Look at the COVID-19 Aid Bill

Adding to the Families First Coronavirus Response Act (FFCRA) that became law on March 18, the Senate voted on March 26 and the next day, the U.S. House of Representatives approved the largest economic-relief bill in U.S. history, the Coronavirus Aid, Relief and Economic Security (CARES) Act. President Donald J. Trump quickly signed the final measure.

Of key interest to many Americans, the bill would provide one-time direct payments to Americans of $1,200 per adult with incomes below a $75,000 ceiling, or $2,400 for married couples and $500 per child.  Above the ceiling, payments would gradually shrink.

Businesses, large and small, also would benefit from this latest legislation. Key provisions of interest to many textile services professionals include:

• For small linen, uniform and facilties services businesses, the legislation woud provide access to nearly $350 billion in loans to help cover expenses such as payroll, rent and utilities. If companies maintain their current workforce, they won’t have to repay the loans.
• Zero-interest loans are available for businesses with feweer than 500 employees – loans that could be forgiven under certain circumstances, such as not laying off employees.
• Loans of up to $10 million would be available through lenders certified by the U.S. Smal Business Administratin (SBA), including banks and credit unions. The government would pay off the loan balances, if the business either doesn’t eliminate jobs lay or rehires already laid-off employees.
• Business tax cuts would include an increase to 50% in the deductions for interest paid by a business. This represents an 11% increase from the 39% level created under the Tax Cuts and Jobs Act.

There also is new, greater flexibility for businesses to deduct losses against taxable income. These provisions include:

• Delays in the payment of payroll taxes typically paid by employers on employees’ wages.  Specifically, employers who normally pay a 6.2% tax on wages would instead have to pay these taxes over the next two years.
• The bill would provide approximately $200 billion in tax assitance to small businesses, much of it through payroll-tax deferrals.
• The new law would allocate $250 billion to expand unemployment insurance to more employees and lengthen its duration to 39 weeks (up from the current 26 weeks).  The bill also would provide an extra $600 per week for the next four months.
• The bill includes a new program, Pandemic Unemployment Assistance, which is designed specifically to help self-employed and contract employees who typically don’t qualify for unemployment benefits.
• The legislation provides incentives for work-sharing and a program to cover a portion of lost wages for employees whose hours cut in order to incentivize businesses to retain employees by having them work fewer hours.
• To help bring back employees who are already laid off, the eight weeks of unemployment assistance would be retroactive to Feb. 15.
• Larger businesses could qualify for deferred tax payments, increased deductibility for interest expenses and immediate expensing of qualified property improvements.
• The new legislation includes a financial lifeline for the hardest-hit industries, such as the airlines, with additional funds available to help other businesses adding up to $500 billion in total aid. Under these programs, restrictions include barring pay hikes for certain executives and stock buybacks. Businesses that retain employees despite significant losses could qualify for a tax credit.
• Businesses with 500-10,000 employees that accept a government loan would have to remain neutral in any “union organizing effort” during the loan period.

Although the March 15 tax-filing deadlines for many uniform and facility services businesses has passed, individuals, including many textile services professionals and other small-business owners, would now have until July 15 to file their taxes. Best of all, if they owe money to the IRS, they can delay payments for up to 90 days without interest or penalties.

The help provided by this new legislation supplements many of the benefits created by The Families First Coronavirus Response Act (FFCR) that took effect on March 18, and the actions of the administration.  However, Congress and the administration are continuing to draft measures to help blunt the economic fallout from the COVID-19 pandemic. As the ever-evolving fight against COVID-19 continues, business and government leaders must keep an eye on new developments. Lawmakers already are planning to create additional programs to supplement and/or expand theCOVID-19 legislation and the actions taken by the administration. So, stay tuned for additional actions.

As always, the ever-changing response the COVID-19 pandemic and the complexity of the rules dealing with its economic impact make it advisable for linen, uniform and facility services operators to seek professional guidance from financial and/or legal counsel in making business decisions affected by these changes.