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Spring Newsletter 2020

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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.
Continue Reading Bipartisan Proposal for Coronavirus Aid, Relief, and Economic Security Act (CARES Act) – Analysis of Certain Key Tax-Related Provisions

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)

Continue Reading Bipartisan Proposal for Coronavirus Aid, Relief, and Economic Security Act (CARES Act) – Summary of Key Provisions

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.
Continue Reading Additional Insight into the Senate Proposal for the Coronavirus Aid, Relief, and Economic Security Act

***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.Continue Reading Senate Proposal for Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

President Trump previously issued an emergency declaration “to provide relief from tax deadlines” in response to the Coronavirus Disease 2019 (COVID-19) pandemic, but without any details. Today the Treasury Department released the details in Treasury Notice 2020-17. The notice can be found here. Details are:
Continue Reading Administration Defers April 15 Tax Payments until July 15

Update: On Wednesday, March 18, the Senate voted (90-8) to approve the Families First Coronavirus Response Act without amendment, and the President signed it into law. Congress and the administration are now referring to the Act as “Phase 2” of its response to the coronavirus emergency. “Phase 1” included $8.3 billion of appropriations toward vaccine development and prevention efforts. Today, the Treasury released its framework for “Phase 3.” The current proposal for Phase 3 would deal with, among other things, direct payments to individual taxpayers, the creation of a small business interruption loan program, and appropriations toward the airline industry and other distressed sectors. Treasury’s Phase 3 framework can be found here. The Senate is expected to begin negotiations on Phase 3 immediately. Ropes & Gray will track these developments and provide additional alerts as information becomes available.

Introduction

On Friday night, March 13, 2020, the House of Representatives passed the Families First Coronavirus Response Act (the “Original Bill”) to bolster the federal government’s response to the coronavirus outbreak and address the severe impact of the coronavirus on Americans’ personal safety and financial security. On Monday evening, March 16, the House passed by unanimous consent a revised version of the bill (the “Revised Bill”).

Continue Reading H.R. 6201 – Families First Coronavirus Response Act, As Amended by House of Representatives March 16, 2020

***This legal development is still in progress. We will update this Alert as the Act makes its way through the legislative process.***

Introduction

On Friday night, March 13, 2020, the House of Representatives passed the Families First Coronavirus Response Act to bolster the federal government’s response to the coronavirus outbreak and address the severe impact of the coronavirus on Americans’ personal safety and financial security.

The bill, which is currently expected to pass the Senate and to be signed by President Trump this week, affects most private employers with fewer than 500 employees and is aimed at mitigating the impact of the coronavirus by providing financial support to those affected by the virus and the efforts to contain the virus’s spread. The new legislation guarantees free coronavirus testing, provides paid emergency leave, enhances the federal unemployment insurance assistance available to states, strengthens food security initiatives, and increases federal Medicaid funding to states. Critically to the employers covered by the law, the leave provisions expand protections under the federal Family and Medical Leave Act and provide for paid sick leave, which in combination will provide paid leave to employees who, among other things, are quarantined per a recommendation of a public official or health professional, who are caring for family members who are quarantined, or who have children that are unable to attend school or day care.

Continue Reading H.R. 6201 – Families First Coronavirus Response Act

A year or so ago, I recorded a short video about how tax is becoming an area of focus for investors which support an ESG (environmental, social and governance) agenda. I concluded that there was an opportunity for fund managers to attract investors by embracing this agenda.

Investors now frequently ask fund managers to align themselves with a particular set of principles, such as the tax code of conduct recently adopted by a group of Danish institutional investors. However, it is important for managers to look carefully at what they might be committing themselves to. The Danish code, for example, includes specific prohibition on certain investments in companies on the EU blacklist of non-cooperative jurisdictions, which has recently expanded to include the Cayman Islands.

Continue Reading Tax and ESG: Who Sets the Agenda?