The Senate March 25, 2020 approved 96-0 the roughly $2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security (CARES) Act, capping many days of around-the-clock negotiations over the third congressional bill to address the crisis. The bill includes numerous employment tax provisions.

The House is expected to pass the bill by the end of the week, possibly by voice vote, and send the measure to the President's desk for his signature.

Employment tax provisions of Senate-passed CARES Act

• Employee retention credit for employers subject to closure due to COVID-19: Eligible employers would receive a 50% credit on qualified wages against their employment taxes for each quarter, with any excess credits eligible for refunds. An eligible employer is one (1) with operations suspended by orders issued in response to COVID-19 or (2) that has suffered a significant decline (more than 50% decrease year-over-year) in gross receipts during the quarters that begin with the quarter in which gross receipts declined by more than 50% and ending with the quarter in which gross receipts have recovered by more 80%.
• Delay of payment of employer payroll taxes: Employers and self-employed individuals would be able to defer payments of the employer share (6.2% of employee wages) of Social Security payroll taxes that would have otherwise been owed from the date of enactment of the legislation through December 31, 2020. The provision requires that the deferred taxes be paid over a two-year period, with half the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.

Otherwise required estimated tax payments during the deferral period would also exclude the payroll taxes that are being deferred. The Social Security trust funds are held harmless for the deferral of employer payroll tax deposits by requiring deposits into the trust funds from general appropriated funds.

• Exclusion for certain employer payments of student loans. The bill would expand an employer-provided benefit to include a payment made by employers for an employee-student's educational loans. Payments made in 2020 to or on behalf of the employee-student, as with other existing educational assistance provided by an employer, would be taxed to the student-employee.
• The bill provides limited relief for single-employer defined benefit pension plans. Plans could delay contributions otherwise due during 2020 until January 1, 2021. At that time, the delayed contributions would be due with interest. The bill also provides that a plan's funded status for purposes of calculating benefit restrictions would be determined as of December 31, 2019 throughout 2020. The bill does not include pension smoothing or amortization extension provisions that had been sought by many plan sponsors to address declines in interest rates and plan asset values.

Expansion of unemployment benefits

The bill also temporarily expands unemployment benefits by expanding the size and scope of unemployment insurance (UI) benefits, including providing relief for self-employed workers and independent contractors.

Specific highlights include:

• $250 billion to expand unemployment benefits: Provides economic relief and much-needed support for workers by making a significant investment in unemployment benefits
• Provides unemployment benefits for more Americans: Ensures that self-employed and independent contractors, like Uber drivers and gig workers, can receive unemployment during the public health emergency; the bill also includes support for state and local governments and nonprofits so they can pay unemployment to their employees
• More money for a longer period for more workers: Makes unemployment benefits more generous by adding a $600/week across-the-board payment increase through the end of July; in addition, for those who need it, the bill provides an additional 13 weeks of benefits beyond what states typically allow
• Temporary provisions: The expansion in unemployment benefits expires at the end of 2020, in recognition of the temporary nature of this challenge

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