After a week of some of the most intense negotiations ever seen on Capitol Hill, the House and Senate have passed a landmark $2 trillion stimulus package intended to keep the U.S. economy afloat during the coronavirus pandemic. Now that President Trump has signed the measure into law, what’s in it for retailers and what do retailers need to do to obtain the assistance that has been provided?
Provisions in the 880-page Coronavirus Aid, Relief and Economic Security Act range from one-time checks for individuals and families to loans and tax measures for small and large companies alike meant to help keep companies in business and workers on payrolls despite closed doors and dried-up sales.
NRF welcomed the measure, saying it offers the lifeline many retailers will need to survive the pandemic. Even money that goes to the public or other industries will help put money in retail customers’ pockets, NRF said.
"Companies that were investing, growing and contributing to a vibrant economy just a few weeks ago have been thrust into survival mode through no fault of their own,” NRF President and CEO Matthew Shay said. “They need a bridge to get through this turbulent time and back to the business of job creation and economic prosperity for their workers and the customers they serve.”
NRF worked closely with the White House and congressional leadership to ensure the legislation would include provisions to meet the needs of retailers, particularly those that have either voluntarily closed stores to protect their workers and customers or been forced to do so under orders issued by governors and mayors across the country. NRF has been on conference calls with President Trump, spoken repeatedly with Treasury Secretary Steven Mnuchin and been in constant touch with CEOs at NRF’s largest member companies and many smaller retailers. Among other efforts, NRF members flooded Capitol Hill with more than 27,000 emails urging senators to approve the measure.
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In a letter calling on Trump and congressional leadership to act, NRF said labor and benefit obligations, rent, loan payments and other expenses have continued for retailers making few if any sales, with losses amounting to tens of billions of dollars a week. For retailers, liquidity in the form of tax provisions or access to credit is “the most important support they can get … until consumers are back in the marketplace,” the letter said.
The CARES Act includes a number of provisions that will benefit retailers, both directly and indirectly:
Tax
- Retailers and restaurants that went ahead with remodeling projects during 2018 and 2019 will be able to receive an estimated $15 billion in almost immediate tax refunds because the legislation fixes the “retail glitch” from the 2017 tax reform law. Affected companies overpaid federal taxes over the past two years because of the mistake, which concerned the depreciation period for improvements. The glitch has been fixed and companies will be able to file amended tax returns and obtain refunds. The Internal Revenue Service is preparing guidance for this and other tax provisions.
- “Net operating loss carryback” has been restored for tax years 2018-2020. This means companies that have a loss will be able to “carry back” the loss to profitable years up to five years earlier and quickly obtain refunds.
- An Employee Retention Tax Credit will encourage employers to retain their workforces by providing a credit against payroll tax liability of 50 percent of qualified wages for businesses that have been partially or fully suspended as a result of a government order or that have experienced a 50 percent reduction in gross receipts.
- Collection of federal payroll taxes is delayed until 2021, with 50 percent due then and 50 percent in 2022.
- Deductions for interest paid on business loans is expanded.
Loans
- A $350 billion Paycheck Protection Program will provide forgivable loans of up to 250 percent of payroll for small businesses with 500 or fewer employees through the Small Business Administration. Information is available from the SBA.
- The Federal Reserve will receive $500 billion to support credit facilities for both direct and indirect lending, which the Fed is expected to leverage to provide more than $4.5 trillion in total support. More details on these credit programs are due within the next 10 days.
Relief for Workers and Consumers
- Subject to income limitations, all Americans will receive one-time checks of $1,200 per adult and $500 per child.
- Under a Federal Pandemic Unemployment Compensation program, the duration of unemployment insurance for workers who lose their jobs because of the coronavirus will be expanded to 39 weeks rather than the usual 26 weeks.
- Individuals receiving unemployment checks will see an extra $600 a week in addition to whatever standard amount is provided in their state.
- Payments will be available from the first week of unemployment instead of the usual one-week delay.