Hope you’re having a good Thursday. The Dow continues to climb and so do unemployment claims, up over 3 million last week. We’ll share the final Phase 3 stimulus / the Coronavirus Aid, Relief, and Economic Security (CARES) Act information below as we now await a vote from the House and eventual signature from the President. This looks good for businesses. Attached is a 12 page document of review from the US Chamber of Commerce. Here are some bullet points:
- You qualify if you are: S corp, a C corp, non-profit, partnership, sole practitioner, LLC, etc. with 500 employees or fewer per entity
- This is a grant, not a loan, if a nonprofit (501c3) or business can show they used the funds to cover payroll and business related expenses like rent/mortgage, utilities, etc. (back dates to February 15)
- 1099s, independent contractors and subcontractors are covered
- Mechanism: Loans (grants) would be immediately available through existing Small Business Administration-certified lenders (7a program), including banks, credit unions, CDFI and other existing lenders.
- The size of the loans would equal 250% of an employer’s average monthly payroll; business-related expenses and other debt obligations over the previous year.
- Conditional upon business or nonprofit retaining their employees and payroll levels during the covered period, the portion of the loan used to cover payroll and payments on pre-existing debt would be 100% forgiven.
- The maximum loan amount is $10 million and the SBA Express loans increased from $350,000 to $1 million with an average of a 36 hour turn-around.
- People who are unemployed would get an extra $600 per week for up to four months, on top of state unemployment benefits to make up for 100 percent of lost wages. The final agreement provides an extra month of unemployment benefits than what Senate Republicans had originally sought.
- Health care providers would secure $100 billion in grants to help fight the coronavirus and make up for dollars they have lost by delaying elective surgeries and other procedures to focus on the outbreak. They would also get a 20 percent bump in Medicare payments for treating patients with the virus.
- The agreement would provide $150 billion for state and local governments, with $8 billion set aside for local governments, which are bleeding tax revenue as only essential businesses remain open and unemployment claims climb by the tens of thousands every day.
- Employers and self-employed individuals will get to defer the 6.2 percent tax they pay on wages that is used to fund Social Security. The deferred tax would have to be paid over the following two years: half by Dec. 31, 2021, and the other half by Dec. 31, 2022.
- Retailers, restaurateurs and hotels will be able to immediately deduct from their taxes what they spend on property improvements. They were supposed to get the write-off in the 2017 tax overhaul, but a glitch actually made them worse off.
- The final package provides more than $30 billion in emergency education funding for colleges and universities, states and school districts.
Part of the relief bill includes one-time payments that are designed to help cover expenses for people experiencing financial setbacks due to the pandemic and the government’s efforts to prevent its spread. Here are some questions and short answers. Again, full text can be found in the attachment.
How big will the checks be?
For individuals making less than $75,000 and married couples making less than $150,000, the checks will be $1,200 per adult and $500 per child under the age of 17. Those amounts phase out for taxpayers above the income thresholds, eventually zeroing out for individuals making more than $99,000 and married couples with no children making more than $198,000.
Who is eligible to receive a payment, and how is income calculated?
Income amounts for the payments made this year are based on 2019 tax returns, or 2018 tax returns for people who haven’t filed their 2019 return yet. For those who haven’t filed a tax return in either year, the IRS can look at income information in Social Security benefit and Railroad Retirement benefit statements to determine eligibility. The payments are essentially an advance on a credit against 2020 taxes. People who receive advance payments based on their 2018 or 2019 income but qualify for a bigger credit amount based on their income this year will receive the remainder of the credit amount to which they are entitled when they file their 2020 tax returns next year. Recipients will not have to pay any money back to the government if their 2020 income is greater than their income in previous years, according to a Republican aide for the Senate Finance Committee.
How quickly will people get the money?
Treasury Secretary Steven Mnuchin said at a press briefing Wednesday that the administration expects to have the money to recipients within three weeks in cases where the IRS has direct deposit information for taxpayers.
After all of this is signed and delivered, we’ll look for emerging information on rumored Phase 4 and Phase 5. “This is not going to be the last bill,” according to Speaker Pelosi. “This bill is about mitigation for the [economic] damage that is being done … The next phase will be recovery.”
Illinois taxpayers will have longer to file their state income taxes this year because of the coronavirus outbreak. Gov. JB Pritzker said Wednesday he is extending the deadline to file state tax returns until July 15. That matches the new deadline to file federal tax returns set by President Trump in response to the virus outbreak. Attached to this message is a document from the Illinois Department of Revenue.
The President has finally issued a major disaster declaration for the state meaning Illinois now has more access to federal funding for local governments and certain non-profits for emergency protective measures.
Finally, we are working on a number of proposals to serve as additional strategies to help mitigate the risk to businesses and the overall risk to the economy on the state level:
Exempt Unemployment Insurance Benefit Claims from Affecting a Business’ Contribution Rate
- While all businesses may consider this, the restaurant, retail and hospitality industry especially are facing the difficult choice of having to layoff many of their employees as demand for their services disappeared overnight. Given the state’s expansion of unemployment insurance benefits, many laid off employees are now eligible for benefits during this uncertain time. As the unemployment system works on a proportional contribution system, businesses are given a rating that influences that business’ contribution to the unemployment system. For unemployment claims resulting from the termination or suspension of employment due to COVID-19. We propose that these do not influence a business’ contribution rating and urge a freezing of rates; thus, this guideline would maintain an accurate image of unemployment benefits paid to former employees respective of the business and keep contribution costs lower for businesses.
Sales Tax Payment Deferral
- While we appreciate Governor Pritzker’s direction to the Department of Revenue to help alleviate some of the unprecedented challenges facing bars and restaurants due to COVID-19, we ask Governor Pritzker to direct the Department of Revenue to also defer sales tax payments for all small businesses for a minimum of sixty to ninety days.
Additional measures include a payroll tax holiday, a pause/shift on the increase of minimum wage on July 1, and the reallocation of cannabis sales tax revenue to create a statewide Micro Loan Program for small businesses.
That should cover it for today. Please continue to reach out to our office and let us know how we can be of assistance.
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Joliet Region Chamber of Commerce & Industry