The HEALS Act

Senate Republican announced on July 27, the Health, Economic, Assistance, Liability Protection and Schools (HEALS) Act providing Phase 4 economic stimulus package.  The HEALS Act will require Democratic support in both houses to be passed, and an uphill battle is expected in finalizing it for enactment as Democrats have their own agenda.  Therefore, the final bill may not incorporate all the provisions contained in the HEALS Act and may look very different from how they are being proposed by Republicans.  Here are some key provisions included in the HEALS Act:

Second Round of Paycheck Protection Program (PPP)

Businesses with fewer than 300 employees that have experienced at least a 50 percent reduction in gross revenue will be able to apply for second round of PPP loan equal to 2.5 times monthly payroll cost during the covered period, limited to $2 million.  To qualify for forgiveness, employers must use at least 60 percent of the loan to cover payroll costs.

Expansion of Employee Retention Tax Credit (ERTC)

Employee Retention Tax Credit eligibility will be relaxed and the credit amount will be increased.  Credit will be increased from 50% to 65% of qualifying wages and gross receipts threshold required to qualify would reduce to 25 percent from 50 percent.  Qualifying wage limitation will be increased from $10,000 per year to $30,000 per year, limited to $10,000 per quarter.  Under the new provision, eligible employers with fewer than 500 employees can claim ERTC.  Additionally, businesses would be able to claim both PPP and the ERTC.

Extension of Work Opportunity Tax Credit (WOTC)

The HEALS Act will add a new target group – COVID-19 unemployment recipients to the qualifying hiring criteria for WOTC.   The credit amount is 50 percent of the first $10,000 of first year wages of the qualifying hire.

100 Percent Deduction for Business Meals

Currently, business meals are only deductible 50 percent.  The HEALS Act will temporarily allow a full deduction for business meals through December 31, 2020 to stimulate restaurant businesses.

Liability Protection

The HEALS Act will provide immunity for businesses, schools and healthcare providers from lawsuits brought against them for exposure to the COVID-19 by increasing the at-fault threshold to gross negligence and intentional.  However, Democrats already have expressed their no-nonsense to this provision.

Second Round of Stimulus Payment

The second round of stimulus payment is structured identically to the rebates made to taxpayers in the spring.  The Act provides $1,200 stimulus payment for single taxpayers and $2,400 for married couple, plus $500 additional payment for each eligible dependent.  Again, the payment amount will be phased out for those with income over $75,000 for single and $150,000 for joint taxpayers.

Extension of Federal Pandemic Unemployment Compensation (FPUC)

The Act would extend the FPUC for two more months through September 2020 at a reduced benefit of $200 per week from $600 per week.  Starting in October, the FPUC will be replaced with a payment that would represent 70 percent of a recipient’s lost wage combined with state unemployment insurance compensation up to $500 per week.