Thursday, May 28, 2020
On May 15, 2020, the United States House of Representatives approved the HEROES Act, which amends previous COVID-19-related stimulus legislation by changing loss carryback rules and providing further tax support for businesses and individuals.
Highlights of the bill include the following:
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed by President Trump on March 27, 2020, included a provision expanding the net operating loss carryback rules by allowing taxpayers to carry back NOLs arising in a tax year beginning in 2018, 2019, or 2020 for five years. The provision also temporarily removed the taxable income limitation to allow a NOL to fully offset income, up from 80 percent previously.
The HEROES Act would amend the CARES Act by limiting carrybacks to taxable years beginning on or after January 1, 2018. In addition, this provision prohibits taxpayers with excessive executive compensation or excessive stock buybacks and dividends from carrying back losses.
Business interruption tax credits
The HEROES Act would make the following improvements to tax credits intended to prevent business interruption:
Credits for paid sick leave and family leave
The HEROES Act would extend the refundable payroll tax credits for paid sick and family leave, enacted in the Families First Coronavirus Response Act, through the end of 2021.
In other notable proposals, the bill would:
The HEROES Act must also be passed by the Senate. However, given that the bill was approved by the Democrat-controlled House along bipartisan lines, and that the Republicans hold a majority in the Senate, the bill is not expected to be approved – at least not in its current form.