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Summary of Tax Provisions in the CARES Act’s Phase Three Stimulus in Response to COVID-19

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News

Summary of Tax Provisions in the CARES Act’s Phase Three Stimulus in Response to COVID-19

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1 Min Read

Authors

Olga LoyRachel Ingwer

Related Locations

Chicago
New York

Related Capabilities

Tax

Related Regions

North America

March 26, 2020

On March 25, 2020, the Senate passed H.R. 748 titled the Coronavirus Aid, Relief, and Economic Security Act as Phase Three of the response to the COVID-19 pandemic. The Bill, a modified version of a legislative proposal released last week by Senate Republicans, is the product of a compromise between Democrats and Republicans. While the Bill provides economic stimulus through various means, a summary of the tax provisions are as follows: 

  • A payroll tax credit of 50% of wages paid to employees (up to $10,000 per employee) for businesses impacted by COVID-19.
  • Deferral of the employer portion of Social Security payroll taxes otherwise due in 2020 until December 31, 2021 for 50% of such taxes and December 31, 2022 for the other 50%.
  • A temporary relaxing of the limitation on charitable deductions for individuals who itemize deductions and for corporations.
  • A $300 “above-the-line” charitable deduction for individuals who do not itemize deductions.
  • A refundable tax credit of up to $1200 ($2400 for joint filers) plus $500 for children under the age of 17 subject to a phase-out starting at income above $75,000 ($150,000 for joint filers) with a mechanism for advanced payments of the credit as soon as possible.
  • Temporary relaxing on the 80% taxable income limitation of use of NOL carryforwards.
  • A 5-year carryback period for NOLs incurred in 2018, 2019 and 2020.
  • Temporary relaxing of the interest deduction limitation provisions of Section 163(j).
  • A rollback of the limitation on deductions of excess business losses of noncorporate taxpayers under Section 461(l).
  • A technical correct to fix the “retail glitch” allowing for immediate deductions for expenditures on qualified improvement property.
  • Acceleration of use of corporate alternative minimum tax credits.

View all of our COVID-19 perspectives here. Contact a member of our COVID-19 Legal Task Force here.

Related Professionals

Related Professionals

Olga Loy

Rachel Ingwer

Olga Loy

Rachel Ingwer

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