The Coronavirus Aid Relief and Economic Security Act (CARES) With Comments

March 30, 2021

Passes the Senate on March 25, 2020, passes the House on March 27, 2020, and signed by President Trump on March 27, 2020.


Paycheck Protection Program

  • A loan program for small businesses including self-employed individuals to help cover near-term operating expenses and provide an incentive to retain their employees.
  • Maximum Loan Amount is limited to 2.5X average monthly payroll costs including salary, wage, commission, and extra amounts paid to tipped employees, health care premiums/benefits and retirement benefits, not in excess of $100,000 per employee or self-employed individual during the 1-year period before the date the loan is made. Loan cannot exceed $10M.
  • Interest rates not to exceed 4%
  • Maximum maturity of 10 years.
  • This loan is eligible to be FORGIVEN up to the amount of costs incurred during the 8-week period after the loan’s origination date provided the employees will not be laid off and payroll costs of the employees are not reduced by more than 25%. The costs allowed to be used are Payroll Costs, Mortgage and Rent payments, Interest on loans, and Utilities.
  • Administered through the SBA 7(a) program and any eligible lender (bank) that is approved through SBA to lend.
  • Businesses with less than 500 employees.
  • Acknowledge that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments.

Economic Injury Disaster Loan

  • SBA’s disaster loan program has been expanded. For updates, please visit
  • Loans offer up to $1 million in assistance.
  • Businesses with fewer than 500 employees.
  • Loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
  • Ineligible to receive a Paycheck Protection Program Loan
  • Terms are maxed at 30 years as determined on a case-by-case analysis after review of borrower’s credit rating (or financial status)
  • There is a $10,000 emergency grant advance that does not need to be paid back even if loan is denied.


Employee Retention Credit for Employers

  • The credit applies to wages paid after March 12, 2020 and before Jan. 1, 2021. This provision provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis.
  • Eligible employers.
  • Employers whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel, or group meetings.
  • Employers who have experienced a greater than 50% reduction in quarterly revenue measured on a year-over-year basis.
  • Wages paid to which employees?
  • Employers with 100 or fewer full-time employees, all employee wages are eligible, regardless of whether the employee is furloughed.
  • Employers more than 100 full-time employees, only the wages of employees who are furloughed or face reduced hours as a result of their employers' closure or reduced gross receipts are eligible for the credit.
  • The term "wages" includes health benefits and is capped at the first $10,000 in wages paid by the employer to an eligible employee.
  • Other. IRS is granted authority to advance payments to eligible employers and to waive applicable penalties for employers who do not deposit applicable payroll taxes in anticipation of receiving the credit.

Payroll Tax Deferral

  • Employers can defer paying the employer portion of certain payroll taxes through the end of 2020. The deferred payroll taxes would be paid over two years 2021-2022.
  • Is not available to small businesses that participated in the Paycheck Protection Program and had debt forgiveness.
  • The tax deferral is also available to 50% of the Self-Employed Taxes.

Repeal of Net Operating Losses Deduction (NOLs) and Carryback

  • The CARES Act allows an NOL to fully offset income. This applies to tax years beginning after December 31, 2017 to which NOLs arising in tax years beginning after December 31, 2017.
  • The CARES Act provides that NOLs incurred in 2019 and 2020 can be carried back to prior years for a refund.


Individual Recovery Rebate

  • $1200 per individual plus $500 for each qualifying child (under 17 years old)
  • This advance credit payment will be based on the 2019 filed tax return, (2018 filed tax return if 2019 is not filed.)
  • If you are not required to file, the IRS will use Forms received for 2019. For example, social security benefits form 1099SA.
  • If you have not filed for 2018 or 2019 but should have, you could still qualify for this credit when you file your 2020 tax return in April of 2021.
  • These rebates are NOT considered income for tax purposes.
  • Beginning Phaseout: Greater than $75,000 for single filers, $150,000 for married filing joint filers, and $112,500 for Head of household filers.
  • Completely phased out without children: Greater than $99,000 for single filers, $198,000 for joint filers, and $136,500 for head of household filers

Expanded Unemployment Insurance

  • Workers who are on unemployment or will be applying for unemployment will receive an increase in benefits of $600 per week for up to four (4) months.
  • There is also an additional 13 weeks of unemployment benefits through 12/31/20 once the state unemployment period runs out.
  • Self-employed individuals and contractors can apply for unemployment

Retirement Account Withdrawals

  • Individuals who take distributions up to $100,000 from their retirement accounts due to Covid-19 hardships will be exempt from the 10% penalty between January 1, 2020 and December 31, 2020. The withdrawals will not be taxable if rolled back into your retirement account within 3 years.
  • In effect, you can borrow up to $100,000 from your IRA(s) and repay the amount(s) any time up to three years later with no federal income tax consequences. And there are no limitations on what you use these funds for during the three-year period.

Other Notable Provisions

  • New $300 charitable deduction will be available to all, so even if you do not itemize you can still take this deduction.
  • Required Minimum Distributions (RMD) from your retirement accounts will be waived for the year 2020.
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