First Quarter Newsletter 2020

In response to the Coronavirus (COVID-19), the tax controversy group has put together a chart detailing tax controversy-related developments as they arise. Please refer to the following list of tax and tax controversy-related alerts for additional insight and guidance:

In this Ropes & Gray podcast, benefits partners Loretta Richard and Josh Lichtenstein discuss the Coronavirus Aid, Relief and Economic Security Act (also known as the CARES Act) in the context of 401(k) plans and other tax-qualified defined contribution retirement plans, including coronavirus-related distributions and loans that can be taken from qualified defined contribution

HEADLINE: On March 31, 2020, the IRS and the Treasury Department issued guidance for businesses, to implement the refundable employment tax credits for qualified sick and family leave wages provided for by the Families First Coronavirus Response Act (FFCRA, commonly known as Phase 2), and for employee retention wages under the CARES Act (commonly known

German papers have called it the most complicated tax fraud trial in modern German history, but the “Cum-Ex” scandal could have implications for the entire financial services industry. Litigation & Enforcement  partners and attorneys Judith Seddon, Rosemarie Paul, Paige Berges and Chris Stott, along with Tax partners Kat Gregor and Andrew Howard

A bipartisan agreement for the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), commonly referred to as Phase 3 of the federal government’s response to the coronavirus outbreak, was signed by President Trump on March 27, after having been passed by the Senate on March 25, 2020 and the House on March 27, 2020. This version updated a prior Senate bill introduced on March 18, 2020. The Senate vote was unanimous (96-0) of those present. The key tax provisions are summarized in this Alert.

Key amongst its relief provisions, the bipartisan CARES Act, if passed by the House of Representatives, would:

  • Expand Small Business Loans to businesses with up to 500 employees (including loosening existing affiliation rules for hotel, food service and franchise businesses), with increased forgiveness of loans used to meet payroll (the Paycheck Protection Program).
  • Establish the Exchange Stabilization Fund to provide direct loans (including funds earmarked for the airline industry and businesses important to national security), loan guarantees and investments broadly in support of the Federal Reserve’s efforts to mitigate adverse economic consequences.
  • Extend Unemployment Insurance Benefits to self-employed individuals and those with limited work histories, provide supplemental benefits for all individuals and extend coverage for up to four months.
  • Provide extensive aid to the healthcare industry and states in addressing the COVID-19 crisis.

The CARES Act also implements several key individual and business tax provisions intended to provide relief to impacted businesses, affected individuals and encourage retention of employees.

Previously, on Thursday night, March 18, 2020, Mitch McConnell introduced into the Senate a prior version of the CARES Act (the “Senate Proposal”) that did not pass the Senate. Ropes & Gray published two Alerts on the Senate Proposal, on the tax-related sections and on all sections. The CARES Act as passed by the Senate on March 25 reflected bipartisan negotiations, and is expected to be put to a vote by the House of Representatives on Friday morning.

Certain key highlighted tax-related provisions of the CARES Act are summarized below, with differences from the March 18 Senate Proposal noted.
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On Friday, March 27, the House approved the bipartisan CARES Act by voice vote, and the President signed it into law.

A bipartisan agreement for the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), commonly referred to as Phase 3 of the federal government’s response to the coronavirus outbreak, was passed by the Senate on March 25, 2020. The vote was unanimous (96-0) of those present. Key amongst its relief provisions, the bipartisan CARES Act, if passed by the House of Representatives and signed by the President (who said he will sign the legislation as soon as it reaches his desk), would:

  • Expand Small Business Loans to businesses with up to 500 employees (including loosening existing affiliation rules for hotel, food service and franchise businesses), with increased forgiveness of loans used to meet payroll (the Paycheck Protection Program).
  • Establish the Exchange Stabilization Fund to provide direct loans (including funds earmarked for the airline industry and businesses important to national security), loan guarantees and investments broadly in support of the Federal Reserve’s efforts to mitigate adverse economic consequences.
  • Extend Unemployment Insurance Benefits to self-employed and those with limited work histories, supplement benefits for all individuals and extend coverage to up to 39 weeks.
  • Provide extensive aid to the healthcare industry and states in addressing the COVID-19 crisis.

The CARES Act also implements several key individual and business tax provisions, intended to provide relief to impacted businesses, affected individuals and encourage retention of employees.

Previously, on Thursday night, March 18, 2020, Mitch McConnell introduced into the Senate a prior version of the CARES Act (the “Senate Proposal”) that did not pass the Senate. Ropes & Gray published two Alerts on the Senate Proposal, on the tax-related sections and on all sections. The CARES Act as passed by the Senate on March 25 reflected bipartisan negotiations, and is expected to be put to a vote by the House on Friday morning. The last-minute amendment proposed to the bill, designed to limit the unemployment benefits provided in the bill, was rejected by the Senate. The proposed bill can be found here.

This Alert covers the following sections of the CARES Act:

  • Keeping American Workers Paid and Employed Act (Title I)
  • Unemployment Insurance Provisions (Title II, Subtitle A)
  • Tax Provisions (including Title II, Subtitles B and C)
  • Life Sciences Provisions (Title III and Title VI)
  • Health Care Provisions (Title III and Title V)
  • Health Care Provisions, Labor Provisions (Title III, Part IV, Subtitle C)
  • Economic Stabilization and Assistance to Severely Distressed Sectors of the United States Economy (Title IV)


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On Friday, March 20, 2020, the Treasury Department, Internal Revenue Service, and the Department of Labor issued primary guidance on the Families First Coronavirus Response Act (the Act) (commonly referred to as Phase 2) in Notice IR-2020-57 (the Notice). Please see alert for discussion of two new important tax details provided in the Notice regarding the Act’s employer tax credits, and for additional discussion of the Act, generally.  The two new important tax details are (1) that employers can be “paid” by retaining certain funds otherwise due to the government  (including income tax withholding from ALL employees), and (2) that rebate requests will be processed by IRS within two weeks or less.
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This legal development is still in progress. We will update this Alert as the Act makes its way through the legislative process.***

**This Alert supplements the Tax Alert, previously published**

On Thursday night, March 18, 2020, Mitch McConnell introduced into the Senate proposed language for the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), commonly referred to as Phase 3 of the federal government’s response to the coronavirus outbreak. The proposed Act builds on the prior two pieces of legislation to expand relief to individuals and business. Among other things, the proposed Act provides changes to tax policy, including authorizing a refund of tax of up to $1,200 per individual and delaying tax filing and payment deadlines for employers and individuals; provides for a $300 billion small business interruption loan program, with maximum loans for eligible businesses capped at $10 million; authorizes the Secretary of Treasury to make or guarantee loans of up to $208 billion to eligible businesses; mandates insurance coverage of coronavirus testing; expands access to telehealth; and provides a number of significant changes to FDA requirements in connection with the prevention or mitigation of life-saving drug shortages. The proposed bill can be found here. The bill is currently being negotiated in the Senate, and must still be approved by the House of Representatives. Negotiations are expected to continue through the weekend.
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***This legal development is still in progress. We will update this Alert as the Act makes its way through the legislative process.***

On Thursday night, March 18, 2020, Mitch McConnell introduced into the Senate proposed language for the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), commonly referred to as Phase 3 of the federal government’s response to the coronavirus outbreak.

Complete language for the CARES Act’s proposal can be found here.

Certain key highlighted provisions of the CARES Act are summarized immediately below. Further below, these sections are included in a high-level summary of all of the CARES Act’s tax-related sections.


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