Weekly Legislative Update March 23, 2020

Senate Passes H.R. 6201 And Sends It To The President
 
Last week, the Senate passed H.R. 6201, Families First Coronavirus Response Act of 2020, by a vote of 90-8. 
 
The bill went to the President, who signed it.
 
The bill provides additional funds for Federal agencies dealing with the coronavirus pandemic, a paid sick leave benefit for those affected by COVID-19, and expansion of the Family and Medical Leave Act of 1993 to include a benefits related to COVID-19.
 
The bill includes tax credits for employers to fund the paid sick leave and family and medical leave benefits.
 
Only employers with fewer than 500 employees are eligible for these benefits and tax credits.  This limitation was placed in the law because most large employers already offer paid sick leave and family and medical leave.
 
Therefore, these benefits mainly assist small businesses and low-income workers, many of whom find jobs with the help of the Work Opportunity Tax Credit. 
 
The benefits will improve the well-being of veterans, people with disabilities, youth, and many others, during the pandemic.
 
In a few days, Treasury will issue regulations on how employers can claim, and receive cash for, the associated tax credits.  It's expected employers will be able to file quarterly.

Latest Round of COVID-19 Legislation Could Lend Greater Assistance to Small Businesses and Their Employees
 
Congress passed, and the President signed, the Families First Coronavirus Response Act ("FFCRA").  The FFCRA (among many other things), requires that, starting April 2, 2020, businesses with under 500 will be required to provide paid leave for certain employees who cannot work or telework because of qualifying COVID-19 reasons.  The Senate leadership is now working to negotiate another response package which could provide significant support for small businesses trying to navigate this unprecedented time.
 
Currently under chief consideration is the CARES Act (S. 3548) which was introduced by Senate Majority Leader Mitch McConnell (R-KY).   As currently drafted, the proposed legislation is aimed at providing sweeping relief to both individuals and companies, including providing for cash payments of up to $1,200 per individual to help lower and middle income families.  Of particular import to small and mid-sized businesses, the bill provides loans of up to $10 million for employers with under 500 employees to help them cover payroll, mortgages, rent and other specified expenses.  As currently drafted, the bill would further allow businesses that retain their employees and payroll levels between March 1, 2020 and June 30, 2020 to have any part of such loan that was used to cover payroll through that period forgiven entirely (to the extent that employees or payroll levels are reduced, loan forgiveness would be proportionately reduced).  The exception to this would be that anything paid to a single employee over $33,333 during the three month period or any payments for leave established by the FFCRA, for which the employer would be receiving a tax refund, would not be eligible for loan forgiveness.
 
Majority Leader McConnell had hoped to have negotiations on the bill completed yesterday.  However, there remain open issues that the Republican and Democratic leadership are trying to work out.  In particular, the Democrats are seeking further expansion of the FFCRA's paid leave provisions and significant additional funds for hospitals and health care providers Negotiations will continue through the weekend with the stated objective of having an agreement and vote by today.
 
There are likely to be significant changes between the current draft and the final product, and it remains to be seen what the loan application and approval process would look like and how quickly employers would be able to access such loans if the bill is passed with these provisions. 
 
However, particularly for small businesses that may have been considering, but have not yet implemented, a layoff or furlough (and who would therefore may be eligible for loan forgiveness), as well as for any business needing an influx of cash to stay in operation - this legislation could seriously impact their decision making and is certainly something to watch.
 
TIA will be continuing to monitor the legislation and to urging Congress to take action to further support small businesses during this difficult time.

Summary of Senate Republican's CARES Act
 
Click here for a section-by-section summary of Senate Republicans' "Coronavirus Aid, Relief, And Economic Security Act (CARES Act)," as revised on March 22.
 
The CARES Act has been the basic template for the ongoing negotiations with Democrats for a final bipartisan bill.  Much of it will be in the final bill which we expect to see later today, as talks to satisfy Democrats' objections continued last night and early this morning.

Governor's Executive Stay at Home Order - Urgent Update In Several States
 
We are now up to at least ten states with these stay at home orders. NAM is tracking these and maintaining resources as well: State Restriction Snapshot Tracker.

TIA SIGNS ONTO LETTER: Requesting immediate COVID-19 DISASTER RELIEF for small businesses and their employees where the core functions of the business cannot switch to remote operation
 
TIA represents small business trades that cannot switch their core functions to remote operation during this disaster outbreak of COVID-19. From automotive services that keep our most common form of transportation safe to food services to retailers providing the necessities of everyday living, these employers and their employees need immediate support to protect their health and safety, their customers' health and safety, and their short and long-term economic viability.
 
The crisis isn't two months away. It's here. Now. Consumers are scared. Many of these businesses are already down by 40% - 75%. Their operating margins cannot sustain such losses. When they fail, millions of employees become unemployed with no other source of available income while thousands of business owners declare bankruptcy. In the meantime, they suffer daily with excessive emotional stress from loss of income and shortages of critical services such as affordable health care and affordable, safe childcare due to sudden and prolonged school closings.
 
We urge Congress and the Trump Administration to implement the following solutions:
  • Lawful declaration that COVID-19 is a "DISASTER" for the purposes of allowing small businesses to obtain funding directly through the Small Business Administration and to obtain access to any other state, federal, and/or private relief dependent on a federal "disaster" declaration.
  • Allow 100% deduction of business losses for non-remote-function-capable small businesses (NRFCSB) for the 2020 tax year applicable to all business formation types (e.g., S Corporations, Sole Proprietors, Partnerships, etc.). A NRFCSB is defined as a small business according to Small Business Administration standards that requires onsite employee activity and consumer interaction in order to engage in its core functions.
  • Allow NRFCSB employees to qualify for Federal-State Unemployment Insurance Program benefits including payroll assistance for reduced hours and without impacting the employer's insurance rate.
  • Provide a federal Child Care Subsidy for NRFCSB employers and employees.
  • Provide Mortgage Assistance plans for NRFCSB employers and employees.
  • Provide federal assistance for health care costs and/or a mandate to private health insurers that they must cover for free or at most the actual cost of necessary health care related to the COVID-19 pandemic; and
  • Provide a 24-hour Suicide Hotline for NRFCSM employers and employees.
We thank you in advance for supporting the true small business backbone of our country.

Auto Care Providers Are Essential Services
 
As many state, local and municipal governments issue directives for assistance in preventing or slowing the spread of COVID-19, properly defining "essential services" is critical.  Essential services are those services that are necessary in order to ensure public welfare; as well as the continued provision of critical resources to address emergencies and to protect human health.

The motor vehicle maintenance, repair and service industry is clearly an "essential service". Despite the importance of social distancing, the public continues to need the ability to obtain basic human needs such as food and medical care. Ensuring that their vehicles are able to operate such that citizens reach grocery stores and medical facilities is clearly an essential service. Further, the retail and wholesale facilities that provide the parts and services necessary to repair and maintain those vehicles must also be considered essential or these essential repair services will become obsolete.

Police, fire, EMT, telecommunications, shut-in care-givers, public transportation, delivery services (including food, medicine and fuel service distribution), all provide vital access to essential goods and services. All of these functions depend on the continued safe functioning of automotive vehicles of all classes.

Providers of motor vehicle parts and goods perform essential services including but not limited to:
  • Fleet maintenance services for first responders (fire, police and ambulatory services)
  • Battery installation for health care professionals deemed as essential personnel
  • Ride share services for dialysis patients unable to transport themselves
  • Transportation for anyone requiring medical care
The vehicle parts and services industry is committed to serving our citizens, enabling the continued provision of other essential services in these trying and uncertain times.

SBA Disaster Loan Update
TIA heard from Richard Lukas (Legislative Director, Economic Development & Commerce for National Governors Association) regarding our coalition letter.  He said they had a conference call with the SBA Administrator this week to brief governors offices aid including the SBA EIDL program.  As of today, all states are officially in the program except Alaska, Hawaii, Minnesota, and South Dakota. 
 
We received the following application information from Michigan's SBA office regarding the forms at https://disasterloan.sba.gov/ela/Information/PaperForms.  It's applicable to all states.
 
IMPORTANT: You may significantly delay the processing of your loan application if you scan and e-mail your paper loan applications.  Best practice is to use these forms to make sure you have all required information, then to manually input all data from paper forms directly into the SBA Disaster Loan system.
 
The Lender Relations Specialist also told me to encourage applicants to estimate their need at the highest end they anticipate for six months to a year.

If anyone hears of a state SBA loan processing malfunction, please share it with TIA so we can bring our combined resources to bear on it.

Governor's Executive Stay at Home Order - Urgent Update
New York released its guidance last week for which businesses are considered essential, and thus not subject to the Governor's 75% workforce reduction directive; a link is below. "Automotive repair" is covered under #5 and #11. 

There is also a link to request designation as an essential business for those not included in the guidance. We've received counsel that the guidance was intentionally vague to allow the sectors listed to be broadly interpreted (thus minimizing the number of petitions to ESD (e.g. a company manufacturing agricultural tires could claim they are exempt under #3 "essential manufacturing, agriculture". We were told to only request designation if there is no real argument to be made that your business is included under the guidance.

IRS Notice 2020-17
 
Last week, the Secretary of the Treasury, Steve Mnuchin, announced that IRS and the Treasury would defer Federal income tax payments up to $1 million for individuals and other unincorporated entities and up to $10 million for corporations from April 15
th until July 15, 2020.  
 
Taxpayers entitled to refunds would still receive them promptly.  Secretary Mnuchin seemed to encourage state departments of revenue to follow the Federal government's action.  Yesterday, Maryland announced that it will follow the Federal government's lead.  More states are sure to follow suit. 

The purpose of this delayed payment is to free up needed capital for people and businesses which are dealing with the Coronavirus crisis. In effect, it is a 90 day interest free loan from the government. 
 
Recently, the IRS issued Notice 2020-17  - Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic which confirmed the Secretary's remarks and clarified them. This notice cleared up the confusion as to whether the time for filing the return was also going to be extended or just the payment.  

We now know only the time for payments will be extended for 90 days. Returns must be timely filed - of course taxpayers can request an extension. Interest and penalties for late payment will also be suspended until July 15, 2020.

Notice 2020-17 will be in IRB 2020-15, dated April 6, 2020.

The IRS has established a webpage on IRS.gov/coronavirus to include all of the available tax-related information. This page will be updated as more information is available.

As a Reminder: Lobby Day and Environmental Summit Postponed
 
Due to current travel concerns and many member companies placing travel bans on international and domestic travel, TIA has made the decision to postpone our Lobby Day and Environmental Summit.

More information and specifics to come.

Thank you for your understanding.