Democrats Introduce The Health and Economic Recovery Omnibus
Emergency Solutions (“HEROES”) Act, Their $3 Trillion Stimulus Package

COVID-19 Business Update

House Democrats introduced their version of stimulus funding recently.  The Health and Economic Recovery Omnibus Emergency Solutions (“HEROES”) Act is a $3 trillion package focused on providing aid to state and local governments, individuals, and businesses, with other allocations including funds to bolster coronavirus testing and contact tracing efforts.

While Republicans have universally rejected the $3 trillion stimulus measure, the draft plan has the seeds for an eventual, smaller compromise.  Continuing economic misery and a still rising death toll, though, would put pressure on both sides to reach one last deal before campaigns for the November elections are fully engaged. The framework for a compromise — probably still weeks away — will be built on state and local government aid, expanded tax breaks and legal protections for businesses and assistance for unemployed workers.

Below are some of the key components of HEROES:

Proposed Changes to Paycheck Protection Plan (PPP)

Here are the more important proposed changes to PPP:

  • Extends the 8-week covered period to 24 weeks.
  • Eliminates the 75/25 rule on use of loan proceeds.
  • Establishes a minimum maturity on PPP loans of 5 years (right now the loans have a 2 year maturity).
  • Creates a safe harbor for borrowers who cannot rehire in the prescribed timeframe.
  • Expands eligibility to all section 501(c) entities.

Stimulus Payments to Individuals 

HEROES would provide for a second round of economic impact payments of $1,200 per family member, up to $6,000 per household.

Enhanced ERC and Payroll Credits for First Responders

HEROES would provide an enhanced employee retention tax credit that encourages employers to keep employees on payroll.  There is also a section that introduced tax credits for companies that employ “first responders”.

Enhanced Tax Credits/Deductions

Individual tax credits like the Child Tax Credit and Earned Income Credit would be enhanced. Also, additional tax deductions would be introduced for “first responders”.

Increase in Economic Injury Disaster Loan (“EIDL”) Funding

HEROES would set aside $10 billion for the EIDL program to continue to fund businesses.

Business Interruption Credit for the Self-Employed

HEROES would provide a 90% refundable individual income tax credit for certain self-employed individuals who have experienced a significant loss of income.

Restoration of the State Tax Deduction

Individuals have a cap on how much they can deduct on their personal tax returns for state taxes paid relating to income and real estate taxes – the so-called SALT limitation, which is $10,000, that was introduced in the 2017 Tax Cuts and Jobs Act.  This bill looks to restore individuals’ ability to take a full deduction for all state taxes paid on their returns.

Extension of Unemployment Benefits

HEROES would extend the federal unemployment benefit program to ensure the weekly $600 federal unemployment payments continue through January 2021.  The CARES Act provided for 4 months of this benefit.

Assisting in Rent and Mortgage Payments

$175 billion would be set aside to assist renters and homeowners make monthly rent, mortgage and utility payments.

Multi-Employer Plans Get Support

Multi-employer plans would receive financial assistance to keep them solvent for thirty years—with no cuts to the earned benefits of participants and beneficiaries.

The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.