On August 8, 2020, President Trump signed an executive order and three memoranda aimed at providing additional economic relief to Americans. The actions include “payroll tax holiday,” renewal of enhanced unemployment compensation, extended student loan relief, and direction to numerous federal agencies to review the need for renewing the expired eviction ban. While much is still unclear, here is what we know about each action:
Payroll Tax Holiday
The Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster allows employers to defer withholding, deposit, and payment of the 6.2% Social Security tax on employee wages or compensation paid from September 1, 2020 to December 31, 2020 without penalties, interest, additional amount, or addition to the tax. Only those whose compensation is less than $100,000 per year, or $4,000 (pre-tax) during any biweekly pay period (or the equivalent amount with respect to other pay periods), would be eligible for the deferral.
Much regarding this action is unclear. As it currently stands, employers would be responsible for paying the deferred amounts at the end of the year; however, President Trump directed the Treasury Department to explore avenues, such as new legislation, that would eliminate the employer’s obligation to pay back the deferred taxes.
Unemployment Compensation
The Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019 extends the federal unemployment benefit that expired on July 31, 2020. The newly proposed weekly benefit, reduced from $600 to $400, is in addition to the regular state unemployment benefits, with the federal government covering $300 and individual states expected to cover the additional $100 per person per week from their Coronavirus Relief Funds. The enhanced payments are retroactive to August 1, 2020.
Student Loan Relief
The Memorandum on Continued Student Loan Payment Relief during the COVID-19 Pandemic extends the current relief created under the Cares Act, which is slated to expire September 30, 2020. This action applies only to loans held by the U.S. Department of Education, and provides forbearance without accrued interest through the end of the year.
Eviction Moratorium
The CARES Act banned late fees and evictions through July 25, 2020 on properties backed by federal mortgage programs or that receive federal funds. The President’s recent Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners does not extend the ban, but rather, calls on the Department of Housing and Urban Development, Department of Health and Human Services, and the Centers for Disease Control and Prevention to investigate whether a new eviction ban is needed. The order also tasks these departments with identifying any and all available federal funds that could be used to provide temporary assistance to renters and homeowners that are facing financial hardships caused by COVID-19.
We recognize that the executive order and memoranda do not provide much in the way of clarity, and there are many questions regarding their implementation. Price Kong will continue to follow and provide updates on the development of these actions and other activity in the House and Senate regarding additional stimulus relief. You can also find additional information on our COVID-19 Resource Center.