As our country grapples with the health, economic, and social impacts of COVID-19, the U.S. Congress has weaponized the U.S. tax law to provide economic stimulus and soften the financial blow dealt by COVID-19 through two key pieces of legislation: (i) H.R. 6201, the Families First Coronavirus Response Act, or the “Families First Act” (signed into law on March 18) and (ii) H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act” (signed into law on March 27). Both the Families First Act and the CARES Act include tax provisions intended to assist businesses and individuals facing financial hardship due to COVID-19. The discussion below highlights the major tax relief provisions in the two pieces of legislation.

Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”) -

Key Takeaways for Businesses

- Net operating losses generated in 2018, 2019, or 2020 permitted to be carried back to the preceding five years and to fully offset income.

- Employers eligible for 50 percent credit for wages (capped at $10,000 wages, or a $5,000 credit, per employee) paid to employees who are unable to work as a result of certain COVID-19 disruptions. The credit is not available to employers with Small Business Interruption loans under the Payroll Protection Loan Program established under the CARES Act.

- Excess business loss limitation rules for non-corporate taxpayers delayed until 2021 (with retroactive effect).

- Temporary increase of business interest expense deduction limitations for 2019 and 2020.

- Employer share of Social Security taxes through the remainder of 2020 are deferred until December 31, 2021 (one-half) and December 31, 2022 (one-half).

- Accelerated ability of companies to recover AMT credits.

- Retroactive correction of bonus depreciation provisions applicable to “qualified improvement property.”

- Waiver of federal excise tax on any distilled spirits used to produce hand sanitizer.