On July 27, the Senate GOP finally released the HEALS Act, its $1 trillion coronavirus relief plan. This package is seen as a starting point for Republicans, teeing up what could be weeks of tough bipartisan negotiations with Democrats to provide much-needed relief in response to the COVID-19 health and economic crisis. ABC will continue to provide updates on these negotiations as they move forward.
Of note, the package would:
- Expand PPP eligibility to include certain 501(c)(6) organizations with 300 or fewer employees, excluding professional sports, political campaigns and lobbying expenses. Eligibility requirements specify that the organization cannot receive more than 10% of receipts from lobbying, the lobbying activities cannot comprise more than 10% of receipts and the organization must have 300 or fewer employees.
- Expand the Employee Retention Tax Credit from 50% of qualified wages reimbursed through the credit to 65%.
Under the CARES Act, employers are eligible for the ERTC if their operations were fully or partially suspended due to a COVID-19-related shutdown order or if gross receipts declined by more than 50% when compared to the same quarter in the prior year. The HEALS Act lowers the amount of the reduction in gross receipts required to qualify as an eligible employer from a 50% decline to a 25% decline compared to the same calendar quarter in the previous year. The CARES Act limited the amount of qualified wages taken into account per employee to $10,000 for the year, and the HEALS Act increases the limitation on qualified wages taken into account per employee to $10,000 per quarter (limited to $30,000 for the calendar year).
The bill also enhances coordination between the credit and the Paycheck Protection Program by allowing employers to be eligible for both programs, but with limitations to prevent overlapping benefits.
- Provide liability protections for employers through temporarily limiting liability for personal injuries arising from alleged COVID-19 exposure at a school, college, nonprofit, church or business. Text of the bill can be found here.
In order to qualify, entities must have made reasonable efforts to comply with applicable public health guidelines and must not engage in willful misconduct or grossly negligent behavior.
These protections would apply to personal injury lawsuits stemming from actual exposure to coronavirus as well as feared or potential exposure. Nuisance claims will also be covered.
Covers coronavirus-related exposure injuries that take place between Dec. 1, 2019 and Oct. 1, 2024.
Notably, the bill does not fix the Paycheck Protection Program tax deductibility issue. ABC has pushed for this change repeatedly since the IRS’s guidance excluded the ability of small businesses to deduct eligible expenses paid with a forgiven PPP loan from their taxes. “Without this relief, millions of small businesses will face significant tax liabilities,” ABC and other business organizations said in a letter to Congressional leaders earlier this month. Treasury Secretary Steven Mnuchin has consistently objected to a fix for this critical issue, defending the IRS guidance and stating that tax deductibility of PPP loans would be “double dipping” into the program. The fix authored by Sen. John Cornyn (R-Texas) was excluded from the final package due to objections from the White House and Treasury.
Continuing the Paycheck Protection Program, the proposal provides $190 billion of committed and appropriated funds to support PPP and PPP Second Draw Loans. It also defines eligibility for PPP Second Draw loans as meeting the SBA’s revenue size standard, employing 300 or fewer employees and demonstrating at least a 50% reduction in gross revenues. Critics have said the restriction would leave too many struggling yet viable employers on the sidelines while putting too much emphasis on businesses on the brink of failure. You can read a section-by-section summary of the provisions here.
The proposal also includes a second $1,200 direct payment to Americans. Under the plan, people earning up to $75,000 can receive the full amount. Dependents, regardless of age, also qualify for $500, expanding the range of people that qualify for cash compared to the initial wave of stimulus checks that left out many adult dependents and college students. The payments phase out for single-filers earning above $99,000 and joint-filers with no children earning more than $198,000. The plan also calls for the reduction in increased federal unemployment benefits from $600 to $200 per week for a 60-day period, or until states are able to provide a 70% wage replacement. More information on these provisions and other critical tax provisions in the bill can be found here.
The GOP package also provides additional flexibility for the $150 billion in state funds provided under the CARES Act and extends the time frame under which that money can be used. The bill includes $16 billion in new money for expanding state testing capacity—on top of $9 billion that hasn’t been spent yet, $26 billion for the development and distribution of vaccines, $105 billion to help schools reopen, $20 billion to assist farmers and ranchers and close to $30 billion to “bolster the U.S. defense industrial base.” You can view more information on the emergency funding here.