Coronavirus Aid, Relief, and Economic Security CARES Act Establishes $2.2 Trillion Financial Backstop to U.S. Economy in Time of Crisis

article was written by
Matt Pate and is a work produced by the Nautilus Group

On March 27, 2020, the U.S. Congress passed, and the President signed into law, a massive and unprecedented economic rescue package to provide a capital infusion to individuals and businesses alike. This legislation follows on the heels of two recent bills aimed at providing emergency medical funding support as well as paid sick leave for many employees. As the saying goes, desperate times call for desperate measures, and the sudden and immediate shutdown of large swaths of the US (and global) economy as a result of the COVID-19 pandemic has resulted in a surge of unemployed workers as well as businesses facing existential concerns. The government mandated closures have triggered a needed government response that has been crafted to include direct cash payments to many, as well as government secured business loans that may be forgiven to the extent proceeds cover payroll costs and certain fixed business expenses. And to demonstrate the true thoroughness of the legislation, Congress saw fit to mercifully grant a temporary exception from excise taxes on alcohol to producers of hand sanitizer.

Key Stimulus Provisions of the
CARES Act

Expedited Small Business Administration (SBA) loans, for businesses with fewer than 500 employees, up to $10 million with loan principal forgivable up to the total cost of eight weeks’
worth of payroll, rent, mortgage interest and utilities of the business

Payments of $1,200 per individual ($2,400 for married couples), plus $500 per child, for individuals with income below certain thresholds ($75,000 single/$150,000 married);

Penalty-free access of up to $100,000 from IRAs and qualified retirement plans for participants impacted by the coronavirus, plus
increased loan capacity to such level;

Waiver of required minimum distributions from IRAs and qualified plans for 2020;

Deferral for payment of the employer portion of the FICA taxes payable in 2020;

The ability to carry net operating losses incurred in 2018-2020 back to prior tax years in order to generate potential tax refunds this year and next; and

Various other short-term tax rules changes, including additional incentives for charitable gifts