Trump signs historic $2 trillion CARES Act into law

The House of Representatives voted Friday to approve the $2 trillion emergency assistance package, the Coronavirus Aid, Relief and Economic Security Act (CARES) that is more than twice the size of America's biggest economic stimulus package, President Barack Obama's 2009 Recovery Act. It's also more than twice the size of America's biggest corporate bailout, President George W. Bush's 2008 Wall Street rescue.  After House passage President Trump immediately signed the bill into law. The legislation was previously approved by the Senate on March 25.

Broadly speaking, the new law represents a positive step forward with much more work to be done. While ICSC is pleased about the tax relief included and the creation of new loan programs, we now focus on working with Congressional leaders, who have acknowledged the necessity of a 4th and possibly 5th package to address the enormity of the challenges the U.S. faces. ICSC is already preparing for the next round of legislative and regulatory measures at the federal and state levels to help the shopping center industry both during and after this crisis. 

“While we are focused on changes that will result in short-term liquidity and regulatory flexibility from lenders, there are a host of important issues to address,” said Betsy Laird, senior vice president of ICSC Global Public Policy. “From business interruption to other financial matters, our industry, which is the fabric of communities across the country, needs help right away.”

“ICSC is working on the next round of priorities and thanks to our leadership and our members, there is no shortage of good ideas,” said Laird. “The interdependency of the people we represent illustrates we truly are all in this together.” 

The CARES Act includes the creation of loan programs and tax relief measures for businesses and individuals, as well as enhanced unemployment insurance benefits. One of the loan proposals is under the “Paycheck Protection Program” of the bill. It is designed for small businesses defined as having fewer than 500 employees. It is an enhanced loan program with the Small Business Administration and the maximum amount of the loan is the lesser between a multiple of 2.5x payroll or $10 million. Under certain conditions, there are aspects of the loan that qualify for forgiveness. The deadline to apply for the small business loan program is June 30, 2020. The SBA will be moving quickly to implement this expanded program.

The second loan program, the Economic Stabilization and Assistance fund, is designed for larger businesses or those that don’t otherwise quality for the SBA program and for businesses where continued operations are jeopardized by the economic fallout of the COVID-19 virus.

There are a handful of tax provisions that will benefit individuals and business as well:

Individual Tax Relief

• 2020 Recovery Rebates for Individuals
  Provides up to $1,200 for individuals; $2,400 for married couples. Those amounts increase by $500 for every child. The rebate phases out for incomes over $75,000 (single) and $150,000 (married).

Business Tax Relief

• Qualified Improvement Property (QIP) technical correction
  Fixes an error in the Tax Cuts and Jobs Act (TCJA) that required tenant improvements to be depreciated over the 39-year life of the building. The fix is retroactive to 2018.
• Employee retention credit for employers subject to closure due to COVID-19 
  The provision provides a refundable payroll tax credit for 50 percent of wages paid during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.
• Delay of Payment of Employer Payroll Taxes
  Allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax. The bill requires that the deferred employment tax be paid over the following two years.
• 5-year Net Operating Loss (NOL) Carryback
  Provides that a loss from 2018, 2019, or 2020 can be carried back five years and removes the 80% taxable income limitation to allow an NOL to fully offset income. 
• Suspension of the Limitation on Losses from Pass-through Businesses
  Allows all losses from a pass-through business to offset other sources of and individual’s income, suspending a new rule imposed in the TCJA [IRC section 461(l)]. 
• Acceleration of Recovery of Corporate AMT credits
• Relaxation of Business Interest Deduction Limits
  Increases the 30-percent limitation to 50 percent of taxable income for 2019 and 2020.

Additional resources:

Earlier this week the Global Public Policy team provided a summary of the latest version of the CARES Act, highlighting relevant provisions. Click here to view a recording of the session.

ICSC is continuing to track U.S. state-by-state business closures and mandates impacting retail real estate and maintaining a list of retailer responses to COVID-19.

The ICSC list of Canadian closures and mandates is located here.