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Posts Tagged ‘CARES Act’

Coalition of Insurance and Business Groups Propose the COVID-19 Business and Employee Continuity and Recovery Fund

Posted on: April 1st, 2020

By: Nicole L. Graham and Zachariah E. Moura

A broad coalition has urged the federal government to create a recovery fund for businesses hit hard by the COVID-19 pandemic.

Representatives of 36 trade groups from real estate, insurance, retail and other sectors issued a joint letter to the Trump Administration and Congress asking for rapid delivery of liquidity to impacted businesses—regardless of size, industry or location—to mitigate a larger financial crisis. 

The coalition gratefully acknowledges the loan programs instituted by the CARES Act and the Act’s support for “Main Street” businesses but advises that businesses seeking to avoid an “unprecedented systemic, economic crisis” need more liquidity. 

The proposed COVID-19 Business and Employee Continuity and Recovery Fund (the “Recovery Fund”) would be financed by the government. A special administrator would oversee the fund, with significant oversight and authority to enter into contracts to provide immediate relief to eligible businesses. 

The Recovery Fund would serve to help businesses retain and rehire their employees and meet operating expense obligations during a time when the businesses are unable to fully operate.  Quarantine and shelter-in-place measures, travel restrictions, and social distancing measures have created an unprecedented level of disruption across all industries. 

The letter warned, “[w]ithout broad-based and expeditious federal action, long-term damage to the financial markets, rampant unemployment, and irreparable harm to communities are almost certain.”  The proposed Recovery Fund is modeled after the 9/11 Victims Compensation Fund and is designed to provide short-term and immediate relief to impacted businesses.  Some of the signatories including National Association of Mutual Insurance Companies and International Council of Shopping Centers have issued statements in support of the establishment of the Fund and called for swift action from the government. 

We will continue to monitor developments related to the Recovery Fund and provide updates as they occur. 

Additional Information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis. Topics include the CARES Act, education claims, law enforcement, the real-world impact of business restrictions, and the viruses’ impact on the construction industry. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

The CARES Act and What It Means for State and Local Governments

Posted on: March 31st, 2020

By: Jacob Daly

Much of the focus on the Coronavirus Aid, Relief, and Economic Security (CARES) Act has been on the relief it provides for individuals and both large and small businesses, as well as the funding it provides for public health initiatives.  Rightfully so.  But the relief it provides for state and local governments should not be overlooked.  Of the $2 trillion appropriated by the law, about $424 billion is allocated for state, local, and tribal governments.  The law also provides additional funding for joint federal-state programs such as Medicaid and unemployment compensation.

The largest single appropriation in the CARES Act for state, local, and tribal governments is $150 billion for the creation of a Coronavirus Relief Fund.  (Note that local governments are eligible to participate in this fund only if they have a population of more than 500,000.)  Of this amount, $3 billion is allocated for Washington, D.C., Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, and $8 billion is allocated for tribal governments.  The remaining $139 billion is to be allocated proportionally among the states, with each state receiving at least $1.25 billion.  Eligible local governments may not receive more than 45% of the amount allocated to the state in which they are located.  A chart prepared by Federal Funds Information for States showing the estimated allocation of the entire Coronavirus Relief Fund among the states, District of Columbia, Territories, and Tribes can be accessed here.

To be eligible for these funds, the chief executive of the government must certify to the Secretary of Treasury that it will comply with the following three conditions:

  1. the funds may be used only for necessary expenditures relating to COVID-19;
  2. the funds may not be used for expenditures that are already accounted for in the government’s most recently approved budget as of March 27, 2020; and
  3. the funds must be used for costs incurred between March 1, 2020, and December 30, 2020.

The Inspector General of the Department of the Treasury has oversight responsibility for funds provided to state, local, and tribal governments, and if it is determined that these funds were used improperly, the offending government must reimburse the federal government.

Other funding for which for state, local, and tribal governments may be eligible includes the following:

  • $454 billion for loans to businesses, states, and cities
  • $30.75 billion for an Education Stabilization Fund for states, school districts, and institutions of higher education for costs relating to COVID-19
  • $45 billion for a Disaster Relief Fund
  • $1.4 billion for deployments of the National Guard
  • $4.3 billion, through the CDC, to support efforts of federal, state, and local public health agencies
  • $25 billion for transit systems
  • $400 million in election security grants for the 2020 federal election cycle
  • $100 million for Emergency Management Performance Grants for emergency management activities
  • $45 million in grants to states for child welfare services
  • $850 million in grants through the Edward Byrne Memorial Justice Assistance Grant program to states for continuation of criminal justice programs
  • $5 billion for the Community Development Block Grant program to enable state and local governments to expand community health facilities, child care centers, food banks, and senior services

The CARES Act was phase 3 of the federal government’s legislative response to the COVID-19 pandemic.  Some members of Congress are already talking about phase 4, and when that happens, FMG will provide timely information about what it means for you.

Additional Information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis. Topics include the CCPA, the CARES Act, Education Claims, Law Enforcement and the viruses’ impact on the Construction Industry. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

The New CARES Act Allows Pandemic Victims to Borrow from Their 401(k)s and IRAs Without Penalty and Defer Required Minimum Distributions

Posted on: March 30th, 2020

By: Greg Fayard

The federal Coronavirus Aid Relief and Economic Security (CARES) Act signed into law March 27, 2020, includes retirement tax relief for victims of the pandemic—namely victims’ 401(k)s and IRAs.

Under section 2202 of the $2 Trillion law (which amends the IRS code), victims under 59 and a half may withdraw up to $100,000 (or the entire balance if less than that) from their retirement accounts (401(k)s and Individual Retirement Accounts (IRAs)) WITHOUT paying the normal 10% penalty as long as they pay back the withdrawn amount within three years.

But who qualifies as a Coronavirus victim and can take advantage of this provision? To qualify, individuals (or their spouse or dependent) needs to be diagnosed with the COVID-19 disease, or experienced adverse financial consequences from being quarantined, furloughed, laid off, having work hours reduced, or being unable to work due to lack of child care stemming from the pandemic. Any early Coronavirus-triggered withdrawals, however, would be taxed depending on the individual’s income and tax bracket, which usually falls in the 20% to 25% range. Hence, while the Coronovirus-sanctioned withdrawals avoid the normal 10% penalty, it does not permit tax-free withdrawals (unless the withdrawal is from a Roth 401(k)). 

Borrowing from your 401(k), however, regardless of the penalty, should be a last resort—especially now, considering the steep decline in retirement account balances resulting from the pandemic. With a turbulent stock market likely in the near future given the extension of the federal “slow the spread” protocols to April 30, 2020, only the most desperate should consider an early 401(k) withdrawal, even if the 10% penalty is temporarily waived for 2020.

There is also tax relief for required minimum distributions under the CARES Act. The recently enacted Setting Every Community Up for Retirement Enhancement (SECURE) Act (enacted December 20, 2019, taking effect January 1, 2020), provides retirees who turned 72 before April 1, 2020, who have traditional IRAs or a 401(k), must take minimum distributions, or RMDs, by the end of the year. If they don’t take their Required Minimum Distribution, they will be penalized 50% of the RMD amount. The RMD is subject to federal income tax. For those who turned 70 and a half in 2019, the RMDs would normally have to be taken by this April. 

Additional Information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis.  On April 2, we will discuss the impact of Coronavirus on law enforcement.  Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Labor & Employment, Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**