Remember what a halftime show is? During a televised sporting event (did you forget what those are too?) there is generally a pause in the action and commentators praise and critique both teams. I know it has been a while since you last watched a sport, let alone, a halftime show. Let’s try to bring back some of those memories and take a pause in the action to sing some praises and raise a few issues with some of the governmental relief provided to date.

President Trump declared COVID-19 a national emergency on March 13th due to the now 1,467,065 total U.S. cases and 88,709 U.S. deaths per the CDC as of May 17th.

To fight the health crisis and combat the associated economic damage, lawmakers have passed a series of new legislation with the faceplate being the $2.3 trillion CARES Act. The CARES Act, signed into law on March 27th, made extensive changes so let’s take a break from the action and play the role of halftime show commentator before we dive into the second half.

Stimulus Checks (Economic Impact Payments)

The headliner of the CARES Act for many Americans was the stimulus checks termed Economic Impact Payments by the United States Treasury.  As of May 8th, $200 billion of the estimated $292 billion in stimulus payments have been sent to those qualify.

That is quite the accomplishment by the U.S. Treasury. 42 days after the CARES Act was signed into law, the Treasury and IRS digested the Act, issued guidance to taxpayers on the process, and distributed over $200 billion. Also deserving of recognition, while these payments are advances of a 2020 tax credit, if your 2020 tax return shows you qualify for less than you were advanced, no repayment will be required. However, if you qualify for an additional amount (i.e. you had a child in 2020) the additional credit will be applied to your 2020 tax return.

Clearly in the first half of play, you must tip your hat to Treasury and the IRS on their speed and to Congress on ensuring the payment would not require repayment. However, with speed comes sacrificed accuracy. Overall, it appears the payments were well targeted and well implemented with a few exceptions. Those exceptions being dependents over the age of 16 and deceased taxpayers. The CARES Act provided that each qualifying individual would receive $1,200 plus $500 per qualifying child, subject to phase out.

A qualifying individual cannot be claimed as a dependent of another taxpayer and a qualifying child must be under the age of 17 on the last tax return on file. These two definitions leave college students and other dependents over age 16 out to dry. The second issue widely seen was payments to deceased individuals. While the economic impact payments were advanced based on your 2018 or 2019 tax return, many surviving spouses and executors of estates were receiving payments for individuals who in some cases passed away over two years ago. The Treasury recognized this error and instructed individuals to return these amounts in FAQ #52.

Congress should have considered dependents over the age of 16 as eligible for the $500 dependent payment and Treasury should have consulting with the social security department to ensure deceased individuals did not receive a payment they were not entitled to.

Unemployment Benefits

The CARES Act also expanded, extended, and increased state unemployment benefits which have provided much needed income to over 30 million individuals in the last month. Unemployment benefits were expanded to self-employed individuals such as independent contractors and gig workers and were extended 13 weeks on top of the state’s normal benefit schedule. These provisions provided much needed liquidity to families and to each state’s unemployment fund.

On the other hand, the increase of traditional state unemployment benefits by $600 per week per person has seen many unintended consequences. Congress was informed that non-cash compensation and benefits provided by employers averaged $600 per employee per week. This effort to bridge the gap has resulted in employees asking to be fired and many others refusing to return to work because the unemployment benefits are more lucrative than their original working wage. This has significantly hurt many small businesses and the productivity of the economy.

Paycheck Protection Program (PPP) Loan

There is so much to say regarding the Paycheck Protection Program (PPP) loans that I will not even attempt to provide any detail regarding all of the issues with this program. The CARES Act provided a new Small Business Administration (SBA) loan referred to as the PPP loan that is equal to two and a half months of average monthly payroll over a previous base period for employers with (generally) less than 500 employees. The loan may be forgiven if used within 8 weeks of funding on qualifying expenses.

Lack of guidance, conflicting rules, complexity, and threats to try to avoid abuse have become synonymous to the Paycheck Protection Program. One day a borrower is told X and the next day X has been overruled and Y is the new standard. It has felt like whiplash to many business owners and their advisors. Congress, the SBA, and Treasury have had little time to draft, digest, and deliver the details of this program but should relief like this be needed again in the future I hope the biggest takeaway is “KISS”, as my high school physics teacher always said, “Keep It Simple, Stupid.”


This halftime show has resembled the Super Bowl Halftime in length but before we go back to the game, we need to take a look at the second half. On Friday May 15th, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act totaling 1815 pages. I have my doubts this will get close to making it out of the Senate but let’s look at few things lawmakers are proposing.

First, the HEROES Act “fixes” the stimulus payments allowing for all dependents to qualify. In addition, a second wave of stimulus checks is called for with payments to qualifying individuals still $1,200 but increasing payments for dependents to $1,200 per dependent up from $500 under the CARES Act.

Second, the HEROES Act proposes changes to existing tax credits the Earned Income Credit and Child Tax Credit providing increases and wider availability to primary low income earners.

Third, the unemployment benefits provided for in the CARES Act are scheduled to expire on July 31st, 2020. The HEROES Act would extend those provisions through the remainder of the calendar year.

Fourth, the major tax reform signed into law by President Trump in December of 2017 placed a $10,000 cap on the deductibility of state and local taxes as itemized deductions. Democrats have been trying to repeal this cap ever since, and the HEROES Act does just that for tax year 2020 and 2021.

Fifth and finally (for our discussion), the HEROES Act extends the time a business must spend their PPP loan on qualifying expenses from 8 weeks to any time before the end of the year. In addition, the Act removes an SBA provision that caps the loan forgiveness at 75% of the payroll costs paid and/or incurred during the 8-week period. These changes to the PPP would be welcome as they would significantly increase the likelihood the loan would be forgiven, and borrowers could avoid the 8-week gymnastics stunts they are being asked to perform.

As you would expect with an 1815-page Act there are many more provisions than discussed above but these are included to give you a taste of a few of the items being discussing in our nation’s capital. This is just halftime and there is likely much more governmental assistance forthcoming as the HEROES Act demonstrates. Hopefully this guidance will be targeted, simple, and speedy so that the post-game show can be more praise and less critique.