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The $1.9 Trillion Dollar American Rescue Plan Act of 2021 Becomes Law

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Latest legal news and recent law changes.

The $1.9 Trillion Dollar American Rescue Plan Act of 2021 Becomes Law

SUMMARY:

  • Provides another round of direct payments of $1,400 for individuals, $2,800 for joint filers, and $1,400 for each qualifying dependent, for individuals with an adjusted gross income (AGI) of $75,000 ($150,000 for couples) or less, with no direct payments for individuals with AGI of $80,000 ($160,000 for couples) or more;
  • Provides $7.5 billion to the Centers for Disease Control and Prevention (CDC) for tracking, administering and distributing COVID-19 vaccines;
  • Appropriates $27.4 billion in emergency rental assistance;
  • Provides $7.25 billion for the Paycheck Protection Program (PPP) for forgivable loans, and extends nonprofits’ eligibility for the loans;
  • Tax changes such as:
    • Raising the maximum Earned Income Tax Credit (EITC) for adults without children from $543 to $1,502;
    • increasing the Child Tax Credit maximum amount to $3,000 per child and $3,600 for children under age 6;
    • extending the employee retention credit established by the CARES Act through December 31, 2021;
    • extending tax credits for employer-provided paid sick and family leave established under the Families First Coronavirus Response Act (FFCRA) through September 30, 2021;
  • Provides $350 billion to help states, counties, cities and tribal governments to assist with COVID-19 and to address its economic effects, including aid to households, small businesses, nonprofits, and industries such as tourism and hospitality;
  • Gives $4 billion to the USDA to assist with purchasing food and agricultural commodities, and making grants and loans for small to mid-size processors, seafood processing facilities, farmers markets, producers and other organizations responding to COVID;
  • Provides $50 million in funding for the Consumer Product Safety Fund to protect consumers from potentially dangerous products related to COVID-19;
  • Provides $4.5 billion for the Low-Income Home Energy Assistance Program to assist eligible low-income households with heating and cooling energy costs;
  • Extends the Pandemic Unemployment Assistance program through September 6, 2021, while increasing the total number of weeks of benefits available to individuals who are not able to return to work from 50 to 79 weeks;
  • Creates a $7.2 billion Emergency Connectivity Fund to reimburse schools and libraries for internet access and connected devices; and
  • Provides $30.5 billion for grants to transit agencies for operating expenses, including payroll and personal protective equipment costs.

The American Rescue Plan Act of 2021 (the “Act”) passed the Senate with a vote of 50 to 49;  the House passed the Senate’s revised version by a vote of 220 to 211. Passed with no Republican support, President Biden signed the Act into law on March 11, 2021.

The Act is a $1.9 trillion continuation of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act Pub.L. 116–136) enacted on March 27, 2020; the $484 billion Paycheck Protection Program and Health Care Enhancement Act (Pub.L. 116–139) enacted on April 24, 2020; and the Consolidated Appropriations Act, 2021 enacted on December 27, 2020 (Pub.L. 116–260) that combined $900 billion in COVID-19 relief with the $1.4 trillion in normal governmental expenses that averted a governmental shutdown.

As part of President Biden’s promise of vaccine availability for all adults by the end of May, the Act allocates $7.5 billion dollars for COVID-19 vaccines. Although the Act’s publicity is focused on the individual level, there are a few items of interest for businesses as well. This includes a dramatic resurrection of an expired program, the creation of three new programs, and some slight ancillary changes to existing relief measures.  

The Act revitalizes the State Small Business Credit Initiative (SSBCI) created by the Small Business Jobs Act of 2010. Until now, the SSBCI’s sole federal funding was the $1.5 billion allotted in its creation. Now, the Act allots an additional $1.5 billion out of the overall $10 billion to “business enterprises owned and controlled by socially and economically disadvantaged individuals,” $500 million to “very small businesses”, and another $500 million to Tribal governments. Unlike the Small Business Administration (SBA) plans, the States administer the SSBCI; so in essence, this provision of the Act subsidizes state versions of the SBA. Some idea of the anticipated administrative costs may be found in the $500 million allotment to provide “technical assistance” to states. States are generally at liberty to set eligibility requirements if recipients are limited to businesses with 500 or fewer employees for loan amounts of $5 million or less. There is no federally imposed revenue ceiling for these programs, not even for “very small businesses.”

The new Restaurant Revitalization Fund is created with a $25 billion allotment, of which $5 billion is allotted to eligible entities with gross receipts of not more than half a million dollars during 2019. This fund is to be administrated by the SBA. Grants are to be equal to pandemic-related revenue loss of the eligible entity, not exceeding $10 million per eligible entity and not exceeding $5 million per physical location of the eligible entity. Applicants to the Shuttered Venue Operators Grant Program are ineligible.

The Community Navigator Pilot Program is another new program in the SBA. This consists of $100 million allotted to nonprofits dedicated to helping businesses apply to the SBA.

Finally, the Payroll Support Program is created with a $3 billion endowment designed to assist employers who have yet to receive COVID-19 related relief. Entities that are “currently expending” PPP funds, that were allowed to claim the CARES Act payroll tax credit in the prior calendar year quarter, or that received a specific air carrier subsidy (15 U.S. Code § 9073), are ineligible. The program is scheduled to last for six months, beginning on the effective date of the first agreement made under the program. There are no other eligibility conditions for employers willing to spend the grant on employees. There is curiously little statutory text devoted to a program of such a wide scope.

The Payroll Protection Program (PPP) is expanded to now include a business or organization that is an “Internet-only news publisher or Internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information.” New PPP loans will be reduced by the amount of SBA Section 7(a) loans executed after December 26, 2020. The Targeted Economic Injury Disaster Loan (EIDL) is fortified with $5 billion to provide $5,000 loans for covered entities with economic loss greater than 50% with no more than 10 employees. This is in addition to prior EIDL payments.

In tax terms, the limitation on excess business losses of noncorporate taxpayers is extended from January 1, 2026 to January 1, 2027. Funds received through targeted EIDL advances and through restaurant revitalization grants are both tax-exempt.

For more information, please contact the Burton Law Firm at 916.822.8700. You can read the full text of the bill, H.R.1319, at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text.

Additional helpful information can also be found on the National Conference of State Legislatures website, at, : https://www.ncsl.org/ncsl-in-dc/publications-and-resources/american-rescue-plan-act-of-2021.aspx.

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California Governor Gavin Newsom Orders Closures of Indoor Operations Statewide

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Latest legal news and recent law changes.

California Governor Gavin Newsom Orders Closures of Indoor Operations Statewide

Effective July 13, 2020, all bars, breweries, and pubs in California must close both indoor and outdoor operations due to rising COVID-19 infections and hospitalizations. Additionally, statewide closures of indoor operations in the following sectors have been ordered:

  • Dine-in restaurants,
  • Wineries and tasting rooms,
  • Movie theaters,
  • Family entertainment centers including bowling alleys and similar venues,
  • Zoos and museums, and
  • Cardrooms

There are additional mandated closures for California counties that have been on the County Monitoring List for three consecutive days. Unless the activity can be modified to operate outdoors or via pick-up, the following industries and activities must shut down immediately:

  • Fitness centers
  • Worship services
  • Protests
  • Offices for non-essential sectors
  • Personal care services, including nail salons, and body waxing and tattoo parlors
  • Hair salons and barbershops
  • Malls

As of July 13, 2020, the following counties have been on the County Monitoring List for three consecutive days: Colusa, Contra Costa, Fresno, Glenn, Imperial, Kings, Los Angeles, Madera, Marin, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Joaquin, Santa Barbara, Solano, Sonoma, Stanislaus, Sutter, Tulare, Yolo, Yuba, and Ventura.
According to the Official California State Government Website, as of July 13, 2020, California has 329, 162 confirmed cases of COVID-19. For more information, visit https://covid19.ca.gov/.

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The Renewed Paycheck Protection Program (aka PPP2)

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Latest legal news and recent law changes.

The Renewed Paycheck Protection Program (aka PPP2)

Probably the most important fact is that PPP funding is available to businesses that previously received a PPP loan. Business are eligible for a second PPP loan of up to $2 million, provided they have 300 or fewer employees, have used or will use the full amount of their first PPP loan, and can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019. 

  • For First-Time Borrowers,
    • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
    • Sole proprietors, independent contractors, and eligible self-employed individuals.
    • Not-for-profits, including churches.
    • Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location.
  • Note – the legislation also allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.
  • Loan Forgiveness. As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. There is also a simplified forgiveness application process for loans of $150,000 or less. PPP2 also makes the following potentially forgivable:
    • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
    • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
    • Covered operating costs such as software and cloud computing services and accounting needs.
  • To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters PPP1 had when it stopped accepting applications in August.

——

See https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdfhttps://home.treasury.gov/system/files/136/PPP-IFR-Paycheck-Protection-Program-as-Amended-by-Economic-Aid-Act.pdfhttps://home.treasury.gov/system/files/136/PPP-IFR-Second-Draw-Loans.pdf, or the SBA  for more details or contact The Burton Law Firm.

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The Consolidated Appropriations Act Provides Further COVID-19 Relief

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Latest legal news and recent law changes.

The Consolidated Appropriations Act Provides Further COVID-19 Relief

The “Consolidated Appropriations Act, 2021” was passed into law on December 27, 2020 following a bipartisan support despite a short stall issued by President Trump regarding the payment of $600 versus $2,000 of individuals who make less than $75,000.  The law allocates $900 billion for COVID-19 relief and a remaining $1.4 trillion portion towards standard spending allocations. The PPP will be in a separate post; however, the other provisions of the Act provides for:

  • $600 Stimulus Checks. Up to January 15th, 2021, single individuals making $75,000 a year or less, and married individuals making $150,000 a year or less, will receive a wired transfer of $600.
    • This will be reduced, pro rata, up to $87,000 for individuals and $174,000 for married couples.
  • Extended Employer Assistance for Student Loans. The CARES Act previously amended the Internal Revenue Code to allow employers to treat student loan repayments as nontaxable employer provided educational assistance. This CARES Act relief was set to expire on December 31, 2020. The CAA extended the relief previously afforded under the CARES Act to employer loan assistance provided through December 31, 2025. Accordingly, employers may amend their employer educational assistance programs to include up to $5,250 worth of student loan payments that may be reimbursed or paid on behalf of an employee on a tax-free basis. Importantly, the $5,250 cap applies as a single unified limitation on both loan payments and other employer provided educational assistance.
  • Qualified Disaster Relief. Eligible participants can generally take qualified disaster distributions of up to $100,000 in the aggregate, to repay hardship distributions for principal residence, to obtain loan relief
  • Partial Plan Termination Relief. Wherefore a retirement plan will not be treated as having experienced a partial plan termination during any plan year which includes the period beginning on March 13, 2020 (the date the COVID national emergency was declared) and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80% of the number of active participants covered by the plan on March 13, 2020.
  • Pension Relief for Construction Workers. Certain multiemployer pension plan participants in the building and construction industry shall be eligible to begin receiving benefits at age 55, even if they are still employed at the time of such distributions.
  • Transfers of Excess Pension Assets to Retiree Health or Life Accounts. Under current law, certain retiree health and life insurance costs may be transferred from a defined benefit pension plan to a retiree health or life insurance account within the pension plan over an elected transfer period of up to 10 years. The CAA, provided certain conditions are met, permits employers to make a one-time election during 2021 to end any existing transfer period for any taxable year beginning after the date of such election.
  • Extended Grace Period for Flexible Spending Accounts. Under the CAA, employers may permit extended grace periods or expanded carryovers for health and dependent care flexible spending accounts (FSAs) for plan years ending in 2020 and 2021.
  • Temporary DCAP Rule for 14 Year Old Dependents. The CAA temporarily changes the maximum age of a dependent from age 13 to 14 and allows participants who had children who aged out of dependent care FSA (DFSA) coverage in 2020 to use DFSA funds through the plan year ending in 2021 to reimburse expenses for the dependent until the dependent attains the age of 14.
  • Changes in Medical Billing Rules. Effective 2022, the law eliminates a plan’s ability to impose restrictions on use of out of network services; requires group health plans to calculate an employee’s cost sharing amount for out of network services; prohibits out of network providers from the practice of billing the plan participant for the balance of the out of network charge not paid by the plan; requires that group health plans and carriers add deductible, out of pocket maximum and consumer resource contact information to any paper or electronic insurance card issued to participants; and requires that group health plans and carriers provide advanced billing and personal cost information to participants based on the contracted rate the plan has established with the provide.
  • New Mental Health Parity Rules. Insured and self-insured group health plans that offer mental health or substance use disorder benefits provided by group health plans. Therein, this provides greater transparency to the patients as well offering great contention in the medical community.
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California Enacts “Regional” Stay-At-Home Order For Areas That Drop Below 15% ICU Capacity

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California Enacts “Regional” Stay-At-Home Order For Areas That Drop Below 15% ICU Capacity

Following a surge up 225% increase in cases, on December 3, 2020 Governor Gavin Newsom announced that a Regional Stay Home Order would be in effect for 3 weeks after a trigger-event, where their regional ICU drops under 15% capacity, which will instruct Californians to stay at home as much as possible to limit the mixing with other households that can lead to COVID-19 spread.

The order will be much less inhibiting than earlier as it allows access to (and travel for) critical services and allows outdoor activities with the goal to preserve Californians’ physical and mental health.

In any region that triggers a Regional Stay Home Order because it drops below 15% ICU capacity, the following sectors must close: 

  • Indoor and outdoor playgrounds
  • Indoor recreational facilities
  • Hair salons and barbershops
  • Personal care services
  • Museums, zoos, and aquariums
  • Movie theaters
  • Wineries
  • Bars, breweries, and distilleries
  • Family entertainment centers
  • Cardrooms and satellite wagering
  • Limited services
  • Live audience sports
  • Amusement parks

The following sectors will have additional modifications in addition to 100% masking and physical distancing:

  • Outdoor recreational facilities: Allow outdoor operation only without any food, drink or alcohol sales. Additionally, overnight stays at campgrounds will not be permitted.
  • Retail: Allow indoor operation at 20% capacity with entrance metering and no eating or drinking in the stores. Additionally, special hours should be instituted for seniors and others with chronic conditions or compromised immune systems. 
  • Shopping centers: Allow indoor operation at 20% capacity with entrance metering and no eating or drinking in the stores. Additionally, special hours should be instituted for seniors and others with chronic conditions or compromised immune systems.
  • Hotels and lodging: Allow to open for critical infrastructure support only.
  • Restaurants: Allow only for take-out, pick-up, or delivery.
  • Offices: Allow remote only except for critical infrastructure sectors where remote working is not possible. 
  • Places of worship and political expression: Allow outdoor services only.
  • Entertainment production including professional sports: Allow operation without live audiences. Additionally, testing protocol and “bubbles” are highly encouraged.

The following sectors are allowed to remain open when a remote option is not possible with appropriate infectious disease preventative measures including 100% masking and physical distancing:

  • Critical infrastructure 
  • Schools that are already open for in-person learning
  • Non-urgent medical and dental care
  • Child care and pre-K

For more information, visit here, or https://www.cnn.com/2020/12/03/us/los-angeles-hospital-beds-christmas-covid/index.html.

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Indoor Dining and Other Restrictions in Place in Sacramento, Surrounding Counties

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Indoor Dining and Other Restrictions in Place in Sacramento, Surrounding Counties

 On November 13, 2020, Sacramento County moved from California’s Red Tier back into the Purple Tier based on current COVID-19 test positivity rates and the adjusted daily rate of new cases. In Purple Tier counties, the risk level of COVID-19 is considered widespread. Sacramento County’s new categorization means the following business restrictions are back in place:

  • Dine-in restaurants and wineries may open outdoors only, with modifications
  • Bars, breweries, and distilleries are closed

El Dorado, Placer, and Yolo counties have also moved back into the Purple Tier and have the same restrictions in place.

In Sacramento County, as of November 16, 2020, the COVID-19 positivity rate is 6.7% and there are approximately twenty-one new COVID-19 cases per 100,000 people, per day. In El Dorado County, the positivity rate is 3.3% and there are approximately 8.2 new cases per 100,000 people, per day. In Placer County, the positivity rate is 6% and there are approximately 15.7 new cases per 100,000 people, per day. In Yolo County, the positivity rate is 6.7% and there are approximately 17.4 new cases per 100,000 people, per day.

For any county to move back into the Red Tier, the positivity rate must drop below 8%, and the daily rate of new cases must drop to between four and seven new cases per 100,000 people, per day.

For more information and industry-specific guidlines, please call our firm at (916) 822-8700 or you may visit covid19.ca.gov/industry-guidance.

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“Paycheck Protection Program” Loan Forgiveness Process Simplified for Loans Under $50,000 to Ease Burden on Small Business Owners and Loan Providers

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“Paycheck Protection Program” Loan Forgiveness Process Simplified for Loans Under $50,000 to Ease Burden on Small Business Owners and Loan Providers

On October 8, 2020, the Small Business Administration (SBA) announced that the loan forgiveness application process has been simplified for roughly 60% of its Paycheck Protection Program (“PPP”) borrowers. PPP borrowers who have borrowed $50,000 or less may now use the new SBA Form 3508S to apply for loan forgiveness. If the business combined with its affiliated subsidiaries borrowed more than $2million, they cannot use this form. Despite being a short form, its contents are to be reviewed with much less scrutiny. As an added bonus, borrowers who use the new form are not subject to reductions in their loan forgiveness amount due to reductions in their number of full-time employees or reductions in employee wages.

The application approval process also benefits the lender side of things, allowing for faster forgiveness approvals. Lenders no longer need to independently verify loan forgiveness amounts reported by borrowers, so long as the borrower submits documentation in support of its request for loan forgiveness. The new loan review process applies to PPP loans of all sizes.

In support of the changes to the loan forgiveness process, the Administrator of the SBA and the Secretary of the Treasury reported that the new SBA Form 3508S “strikes an appropriate balance between the need for simplification in the forgiveness process with the responsibility to protect the integrity of the program and safeguard taxpayer funds.”

For more information on obtaining PPP loans or changes to the loan forgiveness process, call us at (916) 822-8700 or visit https://www.sba.gov/article/2020/oct/08/sba-treasury-announce-simpler-ppp-forgiveness-loans-50000-or-less.

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Indoor Dining Now Permissible in Sacramento County

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Indoor Dining Now Permissible in Sacramento County

On September 29, 2020, California officials announced that the number of coronavirus cases in Sacramento County had dropped sufficiently over the previous two weeks to categorize the county risk level as “substantial” rather than “widespread.” This new categorization allows for expanded indoor business for certain industries in Sacramento County.

Sacramento County’s previous risk level “widespread,” meant that more than eight percent (8%) of coronavirus tests were positive, and there were more than seven new coronavirus cases per 100,000 people, per day. For county risk to be classified as “substantial,” the positivity rate for coronavirus tests has dropped to between five and eight percent (5 – 8%), and there must be no more than four to seven new coronavirus cases per 100,000 people, per day.

With this news, restaurants in Sacramento County can now open indoors, with modifications. Restaurants must operate at a maximum of 25% capacity or 100 people, whichever is fewer. Wineries may also now operate outdoors only, with modifications. Bars, breweries, and distilleries that do not serve food are currently to remain closed.

For more information, please call our firm at (916) 822-8700 or you may visit covid19.ca.gov/industry-guidance.

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California Governor Signs Three Bills Intended to Bolster Small Businesses in California

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California Governor Signs Three Bills Intended to Bolster Small Businesses in California

On September 9, Governor Gavin Newsom signed several bills intended to bolster small businesses in California that have been impacted by the COVID-19 pandemic. The new laws are set to take effect on January 1, 2021.

Senate Bill 1447 creates the “Main Street Hiring Tax Credit,” which allows businesses with fewer than 100 employees to claim a credit against their sales and use taxes. Beginning this year, a $1,000 credit is available for each new full-time employee hired in 2020, up to $100,000; however, the credit is only applicable to businesses whose gross income has declined at least 50% in Q2 (starting April 2020).

Assembly Bill 1577 excludes Paycheck Protection Program loans and other federal CARES Act funds from both federal and state income taxes. The new law also forgives the debt on such loans equal to the amount of the recipient’s payroll costs, mortgages, rents, and utility payments.

Senate Bill 115 appropriates $561 million this year in stimulus and construction projects across California.

While signing the bills into law, Governor Newsom remarked that surveys found that as many as 44% of small businesses in California were contemplating closures due to the economic crisis caused by the COVID-19 pandemic. The bills were all passed without opposition in the Legislature.

For more information, contact us at 916-822-8700 or visit the California Legislative Information site at https://leginfo.legislature.ca.gov/.

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President Signs COVID-19 Relief Orders While Congress Works on a New Economic Stimulus Package

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President Signs COVID-19 Relief Orders While Congress Works on a New Economic Stimulus Package

On August 8, 2020, President Donald Trump signed one executive order and three memorandum regarding various forms of economic relief in response to the COVID-19 pandemic. This is in contrast to what many have reported; that all were executive orders.

An executive order is directed to, and govern actions by, federal government officials and agencies, and must cite the legal authority the president has to issue it. Executive orders, according to the Library of Congress, have the force of law if their topic “is founded on the authority of the President derived from the Constitution or statute.”

Contrasting this, an executive memorandum is similar, but is not required by law to be reported in the Federal Register, and does not need to cite the legal authority the president has to issue it.

  • The Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners calls for the Health and Human Services Secretary and Centers for Disease Control and Prevention Director to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary.” The executive order does not provide financial relief to renters.
  • The Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease authorizes the Secretary of Homeland Security to make available up to $44 billion dollars in unemployment aid. The Memorandum calls for the aid to resume at an amount of $400.00 per week, for those who qualify, and to last until December 6, 2020, or until the aid runs out. The federal government will provide $300.00 of that aid, and states must contribute the remaining $100.00.
  • The Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster delays payroll tax collection for those who make less than $4,000.00 every two weeks. Specifically, the Memorandum instructs the U.S. Treasury to cease collection of payroll taxes from September 1, 2020, through December 31, 2020. The Memorandum additionally instructs the Secretary of the Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”
  • The Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic waives interest on federal student loans through the rest of the calendar year, and allows holders of those loans to delay payments until December 31, 2020.

Congress has indicated that it will be on recess for the rest of August; as such, it is unlikely that Congress will pass a new economic stimulus package before September. Due to potential judicial challenges, it is unknown which parts of these Presidential actions will be implemented, so check back frequently for further updates.