May 4 COVID-19 UPDATE

May 4, 2020 ARA Update to Recyclers

Congress
After more than five weeks, U.S. Senators will return to Washington, D.C., where the Senate will reconvene at 3 pm. Senate Majority Leader, Mitch McConnell (R-Ky.), has communicated that he will prioritize holding floor votes on “mission-critical Covid-19 nominees.” In the meantime, the U.S. House of Representatives is planning to return to the Washington next Monday, May 11th.  

On Sunday, White House economic advisor Larry Kudlow raised the possibility of another round of economic stimulus legislation from Congress. However, Kudlow stated that the White House will monitor how previous infusions of money by Congress will impact the U.S. economy before determining what should be included in the next relief bill.

COVID-19 Relief Programs
Last Thursday, the IRS provided guidance relating to the Paycheck Protection Program (PPP) loans. The IRS clarified that “otherwise deductible business expenses, like salaries, will not be deductible if they were paid for by a forgiven PPP loan – thereby preventing a ‘double tax benefit.’” However, some members of Congress such as Ways and Means Committee Chairman, Richard Neal (D-Mass.), and Senate Finance Chairman, Chuck Grassley (R-Iowa), want to ensure that forgiven PPP loans for business expenses are deductible. Both the Republicans and Democrats have said that the IRS’s guidance on Thursday was not consistent with Congress’s intent. Chairman Neal even expressed the need for a legislative remedy in the next round of COVID-19 related legislation.

 The Department of Justice has launched a review of the Small Business Administration’s (SBA) $670 billion emergency loan program. This review has already found potentially fraudulent activity by businesses in the PPP loan program. The Department’s review comes after Secretary of the Treasury, Steve Mnuchin, stated last week that the SBA would audit SBA loans over $2 million.
       
State Economic Re-openings
According to the New York Times, 24 states have begun lifting stay at home order restrictions as state economies reopen. For a breakdown of which states are reopening and which are still shut down CLICK HERE.