Heroes Act: Revenue Provisions
Updated October 2, 2020
Congressional Research Service
https://crsreports.congress.gov
R46358
link to page 3 link to page 10 Heroes Act: Revenue Provisions
ongress continues to consider proposals intended to al eviate the economic effects
associated with the Coronavirus Disease 2019, or COVID-19, pandemic. One such
C proposal, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES)
Act (H.R. 6800), was introduced in the House on May 12, 2020, and passed by the House on May
15, 2020.1 To date, the Senate has not considered H.R. 6800. A revised version of The Heroes Act
(H.R. 8406) was introduced on September 29, 2020. The House passed the revised version of the
Heroes Act on October 1, 2020, as a House amendment to the Senate amendment to H.R. 925.
Division F of H.R. 8406, or the COVID-19 Tax Relief Act of 2020, contains a number of
individual and business tax provisions, including
a one-time direct payment to eligible individuals;
enhanced benefits and/or expanded eligibility for the earned income tax credit
(EITC), child tax credit, and child and dependent care tax credit, and suspension
of the limitation on the deduction for state and local taxes paid;
expanded utilization options for certain employee health and dependent care
benefits;
expansions of tax credits for paid sick leave and paid family leave;
tax benefits for businesses and employers, including tax credits for employers
retaining and hiring employees in businesses subject to COVID-19-related
interruptions and deductibility of expenses financed by forgiven Paycheck
Protection Program loans; and
a permanent limitation on using noncorporate business losses to offset
nonbusiness income, and reduced ability to carry back recent net operating
losses.
The COVID-19 Tax Relief Act of 2020 was included in Division B of H.R. 6800. In addition to
the provisions above, the May 2020 version contained additional tax credits for employers and
employees in businesses susceptible to COVID-19-related interruptions and an expansion of
eligibility for the direct payments provided in the CARES Act.
Consideration of The Heroes Act follows enactment of other laws addressing the COVID-19
crisis. Those laws are (1) the Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020 (P.L. 116-123); (2) the Families First Coronavirus Response Act
(FFCRA; P.L. 116-127); (3) the Coronavirus Aid, Relief, and Economic Security (CARES) Act
(P.L. 116-136);2 and (4) the Paycheck Protection Program and Health Care Enhancement Act
(P.L. 116-139).
Table 1 briefly summarizes the tax provisions in Division F of the September 2020 version of the
Heroes Act (H.R. 8406). Table 2 briefly summarizes the major tax provisions in Division B of the
May 2020 version of the Heroes Act (H.R. 6800). Links to CRS resources with additional
relevant information, where available, are provided in both tables.
1 H.R. 6800, as passed by the House on May 15, 2020, is the Heroes Act (as opposed to the Health and Economic
Recovery Omnibus Emergency Solutions (HEROES) Act , which was the title of t he bill when introduced).
2 For more on tax provisions in the CARES Act, see CRS Report R46279, The Coronavirus Aid, Relief, and Economic
Security (CARES) Act—Tax Relief for Individuals and Businesses, coordinated by Molly F. Sherlock. For more on
other CARES Act provisions, see CRS Report R46299, Coronavirus Aid, Relief, and Econom ic Security (CARES) Act:
CRS Experts, by William L. Painter and Diane P. Horn.
Congressional Research Service
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Heroes Act: Revenue Provisions
Table 1. The Heroes Act (H.R. 8406): Division F—Revenue Provisions
(COVID-19 Tax Relief Act of 2020; September 2020)
Section Title
Description
CRS Resources
Title I—Economic Stimulus
Subtitle A—Additional Recovery Rebates to Individuals
Additional Recovery
Would enact additional direct payments for
For background, see
Rebates to Individuals
individuals. These payments would be structured
CRS Insight IN11513,
as refundable tax credits against 2020 income
COVID-19 and Direct
taxes, but would be issued (and hence received)
Payments to Individuals:
in 2020, as opposed to 2021 (when 2020 income
Comparison of Recent
tax returns wil be filed). Amount and eligibility
Proposals for a Second Round
for the advanced credit would general y be based
of Payments, by Margot L.
on information from 2019 income tax returns (or
Crandal -Hol ick.
2018 returns, if 2019 had not been filed).
Payments would equal $1,200 per eligible
CRS Report R46415, CARES
Act (P.L. 116-136) Direct
individual ($2,400 for married joint filers), and
Payments: Resources and
$500 for each eligible dependent.
Experts, coordinated by
The payment would phase out at a rate of $5 per
Margot L. Crandal -Hol ick.
$100 of income above $75,000 ($112,500 for
head of household filers, $150,000 for married
CRS Insight IN11282, COVID-
joint filers).
19 and Direct Payments to
Individuals: Summary of the
Eligible individuals would need to provide a
2020 Recovery
taxpayer ID—either an SSN or ITIN—to receive
Rebates/Economic Impact
the payment.
Payments in the CARES Act
These payments would general y be exempt from
(P.L. 116-136), by Margot L.
reduction for debts owed to or col ected by
Crandal -Hol ick.
governmental agencies (including past-due child
CRS Insight IN11234, Tax
support) and private/commercial debts.
Cuts as Fiscal Stimulus:
For eligible individuals who did not file a 2019 or
Comparing a Payrol Tax Cut to
2018 income tax return and who were recipients
a One-Time Tax Rebate, by
of Social Security, Supplemental Security Income
Mol y F. Sherlock and
(SSI), or Department of Veterans Affairs (VA)
Donald J. Marples.
benefits, Treasury would be directed to issue
CRS Report RS21126, Tax
payments based on information provided to the
Cuts and Economic Stimulus:
Social Security Administration (SSA) or VA.
How Effective Are the
Would clarify that if a direct payment for a
Alternatives?, by Jane G.
specified Social Security, Supplemental Security
Gravel e.
Income (SSI), Railroad Retirement, or Veterans
beneficiary was deposited into the account of a
representative payee (“payee”) or fiduciary, it
shal be used only for the benefit of the entitled
beneficiary. The payee and fiduciary enforcement
provisions would apply as under current law.
Treasury would be directed to conduct outreach
to other eligible nonfilers.
Any checks could not include the name,
signature, image, or likeness of any elected
official, including the President or Vice President
of the United States.
Treasury would be required to provide weekly
updates to Congress on the number and amount
of payments made.
If a taxpayer received a larger advanced credit in
2020 than they were eligible for on their 2020
Congressional Research Service
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Section Title
Description
CRS Resources
income tax return, they general y would not be
required to pay it back. If an individual received
an advanced payment less than what they were
eligible for on their 2020 income tax return, they
could claim the difference on that return (filed in
2021).
Subtitle B—Earned Income Tax Credit
Strengthening the
Would temporarily for 2020 expand both
For background, see
Earned Income Tax
eligibility for and the amount of the EITC for
CRS Report R43805, The
Credit for Individuals
taxpayers without qualifying children by modifying
Earned Income Tax Credit
with No Qualifying
the eligibility age and credit formula.
(EITC): How It Works and
Childrena
Regarding eligibility age, would expand eligibility
Who Receives It, by Margot L.
for the earned income tax credit (EITC) for
Crandal -Hol ick and Gene
individuals with no qualifying children—
Falk.
sometimes referred to as the “childless EITC”—
by increasing the maximum eligibility age from 64
to 65, and by al owing eligible taxpayers ages 19
to 24 to claim the childless EITC so long as they
are not students. Qualified foster youth and
homeless youth aged 18-24 would be al owed to
claim the credit even if they are students.a
Regarding the credit amount, would temporarily
increase the childless EITC by increasing the
earned income amount and phaseout threshold
amounts to $9,720 and $11,590, respectively,
while also doubling the phase-in and phaseout
rates from 7.65% to 15.3%. The maximum EITC
would increase from $538 to $1,487 in 2020.
Taxpayers Eligible for
Would permanently al ow taxpayers who
Childless Earned Income
currently cannot claim the childless EITC because
Credit in Case of
al of their qualifying children do not have SSNs
Qualifying Children who
to be eligible to claim the childless EITC.
Fail to Meet Certain
Identification
Requirementsa
Credit Al owed in Case
Would permanently al ow married taxpayers
of Certain Separated
who file their tax returns as married filing
Spousesa
separately to claim the EITC if they live with a
child for whom they can claim the EITC for more
than half the year and either (1) do not have the
same principal place of abode as their spouse for
the last six months of the year, or (2) have a
decree, instrument, or agreement (i.e., other
than a divorce decree) and do not live with their
spouse at the end of the year.
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Section Title
Description
CRS Resources
Elimination of
Would permanently eliminate the disqualified
Disqualified Investment
investment income test. Under current law,
Income Testa
taxpayers with investment income over a certain
threshold—$3,650 in 2020—are ineligible for
claiming the EITC. Disqualified investment
income is defined as interest income (including
tax-exempt interest), dividends, net rent, net
capital gains, and net passive income. It also
includes royalties from sources other than the
filer’s ordinary business activities.
Application of Earned
Would permanently provide authority to make
For background, see
Income Tax Credit in
payments to Puerto Rico, American Samoa, and
CRS Report R44651, Tax
Possessions of the
mirror-code territories for amounts they pay out
Policy and U.S. Territories:
United Statesa
in the EITC. For Puerto Rico and American
Overview and Issues for
Samoa, such payments would be contingent upon
Congress, by Sean Lowry.
increasing the amount of their EITC or enacting
an EITC, respectively.
Temporary Special Rule
For the purposes of calculating their EITC on
for Determining Earned
their 2020 income tax return, would al ow
Income for Purposes of
taxpayers to substitute their 2019 earned income
Earned Income Tax
for their 2020 earned income if their earned
Credita
income at the end of 2020 was less than their
prior-year earned income.
Subtitle C—Child Tax Credit
Child Tax Credit
Would eliminate the phase-in of the refundable
For background, see
Improvements for 2020
portion of the child credit (often referred to as
CRS Report R41873, The
the “additional child credit” or ACTC) and
Child Tax Credit: Current Law,
eliminate the maximum amount of the ACTC
by Margot L. Crandal -
($1,400). Hence the child credit would be a “ful y
Hol ick.
refundable” $2,000 per child credit for that year,
(stil subject to the current law phaseout for
CRS Report R46502, The
higher-income taxpayers). As a result, families
Child Tax Credit: Selected
with little or no income would be able to receive
Legislative Proposals in the
the maximum amount of the child tax credit as an
116th Congress, by Margot L.
increase in their refund. (For these families, the
Crandal -Hol ick.
entire amount of their child tax credit would be
received as the ACTC.)
Would direct the IRS to establish a program to
advance the expanded credit to taxpayers on a
monthly basis (or as frequently as deemed
feasible by the Treasury Secretary). If the
advanced amounts were greater than the al owed
amount, the excess would be paid back by the
taxpayer.
Al changes would be temporary for 2020.
Congressional Research Service
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Section Title
Description
CRS Resources
Application of Child Tax
Would effectively expand child credit eligibility to
For background, see
Credit in Possessionsa
residents of Puerto Rico and mirror-code
CRS Report R44651, Tax
territories by providing payments to Puerto Rico
Policy and U.S. Territories:
and the territories for amounts they pay out in
Overview and Issues for
the child credit. This change would be
Congress, by Sean Lowry.
permanent. Authorizes payments to American
Samoa in the amount that would have been paid
to residents of American Samoa if the credit
would have been provided to such residents.
Subtitle D—Dependent Care Assistance
Refundability and
Would create a more generous formula for the
For background, see
Enhancement of Child
child and dependent care tax credit (CDCTC)
CRS Report R44993, Child
and Dependent Care
and make the credit refundable for 2020. The
and Dependent Care Tax
Tax Credita
expanded formula would al ow eligible taxpayers
Benefits: How They Work and
to claim up to 50% of employment-related child
Who Receives Them, by
care expenses for the credit (up from 35%) and
Margot L. Crandal -Hol ick.
increase to $120,000 the income level at which
that percentage begins to phase out (up from
$15,000). Hence, the credit rate would phase
down to 20% when the taxpayer’s income was
greater than $180,000 (versus $43,000 under
current law). Would also double the maximum
amount of qualified expenses to $6,000 for
taxpayers with one qualifying dependent and
$12,000 for taxpayers with two or more
qualifying dependents (up from $3,000 and
$6,000, respectively). In addition, would
temporarily make the CDCTC refundable.
Increase in Exclusion for
Would increase the maximum amount of
Employer-Provided
qualifying child care expenses that eligible
Dependent Care
taxpayers could exclude from their income from
Assistancea
$5,000 to $10,500 for 2020.
Subtitle E—Credits for Paid Sick and Family Leave
Extension of Credits
The Families First Coronavirus Response Act
For more, see
(FFCRA; P.L. 116-127) includes refundable payrol
CRS Insight IN11243, Tax
tax credits for certain required paid sick and
Credit for Paid Sick and Family
family leave for 2020. This provision would
Leave in the Families First
extend the tax credits through February 28,
Coronavirus Response Act
2021.
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Repeal of Reduced Rate
The payrol tax credit for paid sick leave wages in
For more, see
of Credit for Certain
FFCRA is limited to $200 per day for certain
CRS Insight IN11243, Tax
Leavea
qualified leave taking, general y caring for an
Credit for Paid Sick and Family
individual affected by COVID-19 or caring for
Leave in the Families First
their child whose school or place of care is
Coronavirus Response Act
unavailable due to COVID-19. The credit is
(H.R. 6201) (Updated), by
limited to $511 per day if employees are taking
Mol y F. Sherlock.
other forms of qualified sick leave, general y for
their own COVID-19-related purposes. This
provision would increase the maximum tax credit
to $511 for al sick leave purposes in FFCRA.
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Section Title
Description
CRS Resources
Increase in Limitations
The tax credit for family leave wages is limited to
For more, see
on Credits for Paid
$200 per day, and $10,000 total per employee.
CRS Insight IN11243, Tax
Family Leavea
For self-employed individuals, the family leave
Credit for Paid Sick and Family
credit is limited to 50 days. This provision would
Leave in the Families First
increase the total credit amount to $12,000 per
Coronavirus Response Act
employee, and al ow self-employed individuals to
(H.R. 6201) (Updated), by
claim the credit for up to 60 days. This provision
Mol y F. Sherlock.
is effective as if included in FFCRA.
Election to Use Prior-
Average daily self-employment income is an
For more, see
Year Net Earnings from
amount equal to the net earnings from self-
CRS Insight IN11243, Tax
Self-Employment in
employment for the taxable year divided by 260.
Credit for Paid Sick and Family
Determining Average
This provision would al ow individuals to elect to
Leave in the Families First
Daily Self-Employment
use average daily self-employment income from
Coronavirus Response Act
Incomea
2019, instead of 2020, to compute the credit.
(H.R. 6201) (Updated), by
This provision is effective as if included in FFCRA.
Mol y F. Sherlock.
Federal, State, and Local
The payrol tax credits for paid sick and family
For more, see
Governments Al owed
leave in FFCRA do not apply to federal, state, or
CRS Insight IN11243, Tax
Tax Credits for Paid Sick
local government employers, or any agency or
Credit for Paid Sick and Family
and Paid Family and
instrumentality of such governments.
Leave in the Families First
Medical Leavea
Government employers are subject to new sick
Coronavirus Response Act
and family leave requirements in FFCRA. This
(H.R. 6201) (Updated), by
provision would al ow government employers to
Mol y F. Sherlock.
claim payrol tax credits for required sick and
family leave. This provision is effective as if
included in FFCRA.
Certain Technical
Technical changes would coordinate the
For more, see
Improvementsa
definitions of qualified wages for paid sick leave,
CRS Insight IN11243, Tax
paid family and medical leave, and the exclusion
Credit for Paid Sick and Family
of such leave from employer Old-Age, Survivors,
Leave in the Families First
and Disability Insurance (OASDI) tax. This
Coronavirus Response Act
provision is effective as if included in FFCRA.
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Credit Not Al owed to
This provision would provide that private-sector
For more, see
Certain Large
employers with 500 or more employees are not
CRS Insight IN11243, Tax
Employersa
eligible for tax credits for paid sick or family
Credit for Paid Sick and Family
leave. This restriction would not apply to federal,
Leave in the Families First
state, or local government employers. The
Coronavirus Response Act
provision would apply to wages paid after the
(H.R. 6201) (Updated), by
date of enactment.
Mol y F. Sherlock.
Subtitle F—Deduction of State and Local Taxes
Elimination for 2020
Taxpayers that itemize their deductions may
For more, see
Limitation on Deduction
claim a deduction for certain state and local taxes CRS Report R46246, The
of State and Local Taxes
paid (the SALT deduction). The 2017 tax revision
SALT Cap: Overview and
(P.L. 115-97) limited SALT deduction claims for
Analysis, by Grant A.
tax years 2018 through 2025, set to $10,000 for
Driessen and Joseph S.
single taxpayers and married couples filing jointly
Hughes.
and $5,000 for married taxpayers filing
separately. That law also excluded foreign real
CRS Report RL32781,
property taxes paid from SALT deduction claims
Federal Deductibility of State
over the same time frame.
and Local Taxes, by Grant A.
Driessen and Steven
Would repeal the SALT deduction limit for tax
Maguire.
year 2020; would not modify the foreign real
property tax exclusion.
Congressional Research Service
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Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Title II—Provisions to Prevent Business Interruption
Improvements to
Would rename the employee retention credit
For more, see
Employee Retention and
the employee retention and rehiring credit, and
CRS Insight IN11299,
Rehiring Credit
would modify the tax credit to (1) increase the
COVID-19: The Employee
credit rate from 50% to 80%; (2) increase the
Retention Tax Credit, by Mol y
amount of wages that can qualify for the credit
F. Sherlock.
from $10,000 annual y to $15,000 per quarter
(limited to $45,000 for the year); (3) modify
CRS Insight IN11436,
credit limitations for large employers, defining
Employment Tax Incentives to
large employers as those with more than 1,500
Promote Recovery from the
ful -time employees in 2019 and gross receipts of
COVID-19 Recession: Policy
more than $41.5 mil ion in 2019 (rather than an
Options, by Gary Guenther
employer with more than 100 employees); (4)
and Mol y F. Sherlock.
al ow a partial credit for businesses with a 10% to
50% decline in gross receipts; (5) al ow state and
local governments, and some federal
instrumentalities, to claim the credit; and (6)
provide that wages paid with federal government
grants are not credit-eligible.
Would apply retroactively to the effective date
provided in the CARES Act.
Certain Loan
Loan forgiveness for additional lenders to
For more on the Payment
Forgiveness and Other
participate in the Payment Protection Program,
Protection Program, see
Business Financial
advance payments for Emergency Injury Disaster
CRS Report R46284, COVID-
Assistance under CARES Loan (EIDL) grants, and payments of principle,
19 Relief Assistance to Smal
Act Not Includable in
interest, and fees on behalf of borrowers under
Businesses: Issues and Policy
Gross Income
covered loans, al authorized in the CARES Act,
Options, by Robert Jay
as wel as grants under the RESTAURANTS Act
Dilger, Bruce R. Lindsay, and
of 2020 (Section 607 of H.R. 8406), would not be
Sean Lowry.
included in gross income for tax purposes.
CRS Report R46397, SBA
Paycheck Protection Program
(PPP) Loan Forgiveness: In
Brief, by Robert Jay Dilger
and Sean Lowry.
For more on the EIDL program,
see
CRS Insight IN11370, SBA
EIDL and Emergency EIDL
Grants for COVID-19, by
Bruce R. Lindsay.
Clarification of
This section clarifies that expenses paid out of
For more, see
Treatment of Expenses
forgiven loans under the Payment Protection
CRS Insight IN11378, IRS
Paid or Incurred with
Program or other related payments that are
Guidance Says No Deduction
Proceeds from Certain
excluded from income would be deductible. This
Is Al owed for Business
Grants and Loans
legislation reverses recent Internal Revenue
Expenses Paid with Forgiven
Service guidance (Notice 2020-32) that held
PPP Loans, by Sean Lowry
these expenses were not deductible. The section
and Jane G. Gravel e.
also clarifies the language in the CARES Act
relating to exclusion of loan forgiveness from
income.
Congressional Research Service
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Section Title
Description
CRS Resources
Title III—Net Operating Losses
Limitation on Excess
Would reinstitute the limits on noncorporate
For more, see
Business Losses of
business losses that existed prior to the CARES
CRS Report R46377, The
Noncorporate
Act and would make the limits permanent. The
Tax Treatment and Economics
Taxpayers Restored and
changes would apply to taxable years beginning
of Net Operating Losses, by
Made Permanenta
on or after January 1, 2018.
Mark P. Keightley.
Prior to the CARES Act, under revisions made by
P.L. 115-97 (commonly referenced as the Tax
CRS Insight IN11240,
COVID-19: Potential Role of
Cuts and Jobs Act [TCJA]), pass-through business
Net Operating Loss (NOL)
owners could use losses to offset other
Carrybacks in Addressing the
nonbusiness income up to an annual limit:
Economic Effects, by Mark P.
$250,000 (single filers) or $500,000 (married
Keightley.
filers). Losses above these limits were considered
excess business losses and could be carried
CRS Insight IN11296, Tax
forward indefinitely subject to the more general
Treatment of Net Operating
rules for net operating losses (NOLs). These
Losses (NOLs) in the
limits on excess business losses are scheduled to
Coronavirus Aid, Relief, and
expire after 2025, at which time businesses wil
Economic Security (CARES)
not be limited in the amount of nonbusiness
Act, by Jane G. Gravel e.
income they may offset with business losses.
The CARES Act suspended the
$250,000/$500,000 limits on offsetting
nonbusiness income for 2018, 2019, and 2020.
Certain Taxpayers
This provision would limit the carryback of NOLs
For more, see
Al owed Carryback of
to losses incurred in 2019 and 2020. Losses could CRS Report R46377, The
Net Operating Losses
be carried back until 2018. Businesses with
Tax Treatment and Economics
Arising in 2019 and
excessive employee compensation under IRC
of Net Operating Losses, by
2020a
162(m), golden parachute payments under IRC
Mark P. Keightley.
280G, or excessive dividend payment and stock
buybacks would be prohibited from carrying back
CRS Insight IN11240,
2019 and 2020 losses.
COVID-19: Potential Role of
Net Operating Loss (NOL)
Under the temporary revisions enacted by the
Carrybacks in Addressing the
CARES Act, businesses are currently al owed to
Economic Effects, by Mark P.
carry back losses generated in calendar years
Keightley.
2018, 2019, and 2020 to up to the five years
preceding the loss year. The CARES Act
CRS Insight IN11296, Tax
suspended the limit to 80% of taxable income for
Treatment of Net Operating
those years. After 2020, NOLs can only be
Losses (NOLs) in the
carried forward and are limited to 80% of taxable
Coronavirus Aid, Relief, and
income, under the rules adopted in the TCJA.
Economic Security (CARES)
Act, by Jane G. Gravel e.
Source: CRS analysis of The Heroes Act (H.R. 8406).
Notes:
a. This provision is the same as in H.R. 6800.
Congressional Research Service
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Heroes Act: Revenue Provisions
Table 2. The Heroes Act (H.R. 6800): Division B—Revenue Provisions
(COVID-19 Tax Relief Act of 2020; May 2020)
Section Title
Description
CRS Resources
Title I—Economic Stimulus
Subtitle A—2020 Recovery Rebates Improvement
Dependents Taken into
Would make al dependents—including
For more, see
Account in Determining
dependent children over 16 years old and adult
CRS Insight IN11358, Older
Credits and Rebates
dependents—eligible for the $500 amount
Children, Adult Dependents,
included in the direct payments enacted under
and Eligibility for the 2020
the CARES Act. Under the CARES Act, only child
Recovery Rebates, by Margot
tax credit-eligible children—general y dependent
L. Crandal -Hol ick.
children 16 years old and younger—are eligible
for the $500 amount. This change would be
retroactive to enactment of the CARES Act.
Individuals Providing
Would al ow eligible taxpayers who provide a
For more, see
Taxpayer Identification
taxpayer ID number—either a Social Security
CRS Insight IN11376,
Numbers Taken into
number (SSN) or individual taxpayer
Noncitizens and Eligibility for
Account in Determining
identification number (ITIN)—to receive the
the 2020 Recovery Rebates,
Credits and Rebates
direct payment enacted under the CARES Act.
by Margot L. Crandal -
Under the CARES Act, eligible taxpayers and
Hol ick and Abigail F.
qualifying children general y have to have a work-
Kolker.
authorized SSN in order to receive the payment.
This change would be retroactive to enactment
CRS Legal Sidebar
of the CARES Act.
LSB10442, Recovery Rebates
and Unemployment
Compensation under the
CARES Act: Immigration-
Related Eligibility Criteria, by
Ben Harrington.
2020 Recovery Rebates
Would prohibit the CARES Act direct payments
For more, see
not Subject to Reduction from being offset by the Treasury for past-due
CRS Insight IN11322, The
or Offset with Respect
child support. Under the CARES Act, the direct
Child Support Federal Tax
to Past-Due Support
payments can general y not be reduced for debts
Offset of CARES Act Economic
owed to or col ected by governmental agencies,
Impact Payments, by Jessica
but can be reduced for past-due child support.
Tol estrup.
Protection of 2020
Would expand the provisions of the CARES Act
For background, see
Recovery Rebates
that currently protect 2020 recovery rebates
CRS Insight IN11282,
from reduction or offset for specified types of
COVID-19 and Direct
governmental debts by exempting those rebates
Payments to Individuals:
from garnishment, levy, attachment, and other
Summary of the 2020
similar debt col ection actions by private or
Recovery Rebates/Economic
governmental creditors.
Impact Payments in the CARES
Act (P.L. 116-136), by Margot
L. Crandal -Hol ick.
Congressional Research Service
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Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Payments to
Would clarify that if a direct payment for a
Representative Payees
specified Social Security, Supplemental Security
and Fiduciaries
Income (SSI), Railroad Retirement, or Veterans
beneficiary was deposited into the account of a
representative payee (“payee”) or fiduciary, it
shal be provided to the entitled beneficiary or
used only for the benefit of the entitled
beneficiary. The payee and fiduciary enforcement
provisions would apply as under current law.
Under the CARES Act, the treatment of
payments deposited in the accounts of payees
and fiduciaries is not specified. This change would
be retroactive to enactment of the CARES Act.
Application to Taxpayers Would instruct Treasury to issue additional
with Respect to Whom
payments in 2020 to individuals whose 2020
Advance Payment has
direct payments under the CARES Act would
Already Been Made
have been larger as a result of the previous
changes (i.e., eligible for an additional $500 for an
adult dependent). The additional amount would
be equal to their new rebate amount less the
payment they already received in 2020.
Congressional Research Service
10
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Subtitle B—Additional Recovery Rebates to Individuals
Additional Recovery
Would enact additional direct payments for
For background, see
Rebates to Individuals
individuals. These payments would be structured
CRS Insight IN11282,
as refundable tax credits against 2020 income
COVID-19 and Direct
taxes, but would be advanced (and hence
Payments to Individuals:
received) in 2020, as opposed to 2021 (when
Summary of the 2020
2020 income tax returns wil be filed). Amount
Recovery Rebates/Economic
and eligibility for the advanced credit would
Impact Payments in the CARES
general y be based on information from 2019
Act (P.L. 116-136), by Margot
income tax returns (or 2018 returns, if 2019 had
L. Crandal -Hol ick.
not been filed).
Payments would equal $1,200 per eligible
CRS Insight IN11247,
COVID-19 and Direct
individual ($2,400 for married joint filers), and
Payments to Individuals:
$1,200 for each eligible dependent (up to three
Considerations on Using
dependents, as defined in Subtitle A).
Advanced Refundable Credits
The payment would phase out at a rate of $5 per
as Economic Stimulus, by
$100 of income above $75,000 ($112,500 for
Margot L. Crandal -Hol ick.
head of household filers, $150,000 for married
joint filers).
CRS Insight IN11256,
COVID-19 and Direct
Eligible individuals would need to provide a
Payments to Individuals:
taxpayer ID—either an SSN or ITIN—to receive
Historical Precedents, by
the payment (as defined in subtitle A).
Gene Falk.
These payments would general y be exempt from
CRS Insight IN11255,
reduction for debts owed to or col ected by
COVID-19 and Direct
governmental agencies (including past-due child
Payments to Individuals: How
support) and private/commercial debts (as
Did the 2008 Recovery
defined in Subtitle A).
Rebates Work?, by Margot L.
For eligible individuals who did not file a 2019 or
Crandal -Hol ick.
2018 income tax return and who were recipients
CRS Insight IN11294,
of Social Security, Supplemental Security Income
COVID-19 and Direct
(SSI), or Department of Veterans Affairs (VA)
Payments to Individuals:
benefits, Treasury would be directed to issue
Summary of the 2020
payments based on information provided to the
Economic Assistance Payments
Social Security Administration (SSA) or VA. (The
in H.R. 6379, the Take
treatment of the payments regarding
Responsibility for Workers and
representative payees would be the same as
Families Act, by Margot L.
described in Subtitle A.) Treasury would be
Crandal -Hol ick.
directed to conduct outreach to other eligible
nonfilers.
CRS Insight IN11234, Tax
Cuts as Fiscal Stimulus:
Any checks could not include the name,
Comparing a Payrol Tax Cut
signature, image, or likeness of any elected
to a One-Time Tax Rebate, by
official, including the President or Vice President
Mol y F. Sherlock and
of the United States.
Donald J. Marples.
Treasury would be required to provide weekly
updates to Congress on the number and amount
CRS Report RS21126, Tax
Cuts and Economic Stimulus:
of payments made.
How Effective Are the
If a taxpayer received a larger advanced credit in
Alternatives?, by Jane G.
2020 than they were eligible for on their 2020
Gravel e.
income tax return, they general y would not be
required to pay it back. If an individual received
an advanced payment less than what they were
eligible for on their 2020 income tax return, they
could claim the difference on that return (filed in
2021).
Congressional Research Service
11
link to page 23 Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Subtitle C—Earned Income Tax Credit
Strengthening the
Would temporarily for 2020 expand both
For background, see
Earned Income Tax
eligibility for and the amount of the EITC for
CRS Report R43805, The
Credit for Individuals
taxpayers without qualifying children by modifying
Earned Income Tax Credit
with No Qualifying
the eligibility age and credit formula.
(EITC): How It Works and
Children
Regarding eligibility age, would expand eligibility
Who Receives It, by Margot L.
for the earned income tax credit (EITC) for
Crandal -Hol ick and Gene
individuals with no qualifying children—
Falk.
sometimes referred to as the “childless EITC”—
by increasing the maximum eligibility age from 64
to 65, and by al owing eligible taxpayers ages 19
to 24 to claim the childless EITC so long as they
are not students. Qualified foster youth and
homeless youth aged 18-24 would be al owed to
claim the credit even if they are students.a
Regarding the credit amount, would temporarily
increase the childless EITC by increasing the
earned income amount and phaseout threshold
amounts to $9,720 and $11,590, respectively,
while also doubling the phase-in and phaseout
rates from 7.65% to 15.3%. The maximum EITC
would increase from $538 to $1,487 in 2020.
Taxpayers Eligible for
Would permanently al ow taxpayers who
Childless Earned Income
currently cannot claim the childless EITC because
Credit in Case of
al of their qualifying children do not have SSNs
Qualifying Children who
to be eligible to claim the childless EITC.
Fail to Meet Certain
Identification
Requirements
Credit Al owed in Case
Would permanently al ow married taxpayers
of Certain Separated
who file their tax returns as married filing
Spouses
separately to claim the EITC if they live with a
child for whom they can claim the EITC for more
than half the year and either (1) do not have the
same principal place of abode as their spouse for
the last six months of the year, or (2) have a
decree, instrument, or agreement (i.e., other
than a divorce decree) and do not live with their
spouse at the end of the year.
Elimination of
Would permanently eliminate the disqualified
Disqualified Investment
investment income test. Under current law,
Income Test
taxpayers with investment income over a certain
threshold—$3,650 in 2020—are ineligible for
claiming the EITC. Disqualified investment
income is defined as interest income (including
tax-exempt interest), dividends, net rent, net
capital gains, and net passive income. It also
includes royalties from sources other than the
filer’s ordinary business activities.
Congressional Research Service
12
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Application of Earned
Would permanently provide authority to make
For background, see
Income Tax Credit in
payments to Puerto Rico, American Samoa, and
CRS Report R44651, Tax
Possessions of the
mirror-code territories for amounts they pay out
Policy and U.S. Territories:
United States
in the EITC. For Puerto Rico and American
Overview and Issues for
Samoa, such payments would be contingent upon
Congress, by Sean Lowry.
increasing the amount of their EITC or enacting
an EITC, respectively.
Temporary Special Rule
For the purposes of calculating their EITC on
for Determining Earned
their 2020 income tax return, would al ow
Income for Purposes of
taxpayers to substitute their 2019 earned income
Earned Income Tax
for their 2020 earned income if their earned
Credit
income at the end of 2020 was less than their
prior-year earned income.
Subtitle D—Child Tax Credit
Child Tax Credit
Would eliminate the phase-in of the refundable
For background, see
Improvements for 2020
portion of the child credit (often referred to as
CRS Report R41873, The
the “additional child credit” or ACTC) and
Child Tax Credit: Current Law,
eliminate the maximum amount of the ACTC
by Margot L. Crandal -
($1,400), making the credit “ful y refundable” for
Hol ick.
that year. As a result, families with little or no
income would be able to receive the maximum
amount of the child tax credit as a refund. (For
these families, the entire amount of their child
tax credit would be received as the ACTC.)
Would increase the eligibility age for a qualifying
child to include 17-year-olds.
Would increase the per-child credit amount to
$3,000 for each of a taxpayer’s qualifying children
ages 6 to 17 years, and $3,600 for each of a
taxpayer’s qualifying children aged 0-5.
Would direct the IRS to establish a program to
advance the expanded credit to taxpayers on a
monthly basis (or as frequently as deemed
feasible by the Treasury Secretary). If the
advanced amounts were greater than the al owed
amount, the excess would be paid back by the
taxpayer.
Al changes would be temporary for 2020.
Application of Child Tax
Would effectively expand child credit eligibility to
For background, see
Credit in Possessions
residents of Puerto Rico and mirror-code
CRS Report R44651, Tax
territories by providing payments to Puerto Rico
Policy and U.S. Territories:
and the territories for amounts they pay out in
Overview and Issues for
the child credit. This change would be
Congress, by Sean Lowry.
permanent. Authorizes payments to American
Samoa in the amount that would have been paid
to residents of American Samoa if the credit
would have been provided to such residents.
Congressional Research Service
13
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Subtitle E—Dependent Care Assistance
Refundability and
Would create a more generous formula for the
For background, see
Enhancement of Child
child and dependent care tax credit (CDCTC)
CRS Report R44993, Child
and Dependent Care
and make the credit refundable for 2020. The
and Dependent Care Tax
Tax Credit
expanded formula would al ow eligible taxpayers
Benefits: How They Work and
to claim up to 50% of employment-related child
Who Receives Them, by
care expenses for the credit (up from 35%) and
Margot L. Crandal -Hol ick.
increase to $120,000 the income level at which
that percentage begins to phase out (up from
$15,000). Hence, the credit rate would phase
down to 20% when the taxpayer’s income was
greater than $180,000 (versus $43,000 under
current law). Would also double the maximum
amount of qualified expenses to $6,000 for
taxpayers with one qualifying dependent and
$12,000 for taxpayers with two or more
qualifying dependents (up from $3,000 and
$6,000, respectively). In addition, would
temporarily make the CDCTC refundable.
Increase in Exclusion for
Would increase the amount of qualifying child
Employer-Provided
care expenses that eligible taxpayers could
Dependent Care
exclude from their income from $5,000 to
Assistance
$10,500 for 2020.
Subtitle F—Flexibility for Certain Employee Benefits
Increase in Carryover
Would permit employers to al ow participants in
For background, see
for Health Flexible
health flexible savings accounts to carry over
CRS Committee Print
Spending Arrangements
unspent amounts up to $2,750 (the maximum
CP10003, Tax Expenditures:
amount for 2020) in the plan year ending in 2020
Compendium of Background
to the plan year ending in 2021. IRS regulations
Material on Individual
al ow either a carryover of $550 or a grace
Provisions—A Committee Print
period of 2.5 months. IRS regulations released on
Prepared for the Senate
May 12, 2020 (Notice 2020-29 and Notice 2020-
Committee on the Budget,
33), al ow ful carryover through calendar year
2018, by Jane G. Gravel e et
2020 and increase on a permanent basis the $500
al. (“Exclusion of Benefits
carryover amount to 20% of the maximum
Provided Under Cafeteria
amount.
Plans,” pp. 751-757).
Carryover for
Would permit employers to al ow participants in
For background, see
Dependent Care Flexible
dependent care flexible savings accounts to carry
CRS Report R44993, Child
Spending Arrangements
over al unspent amounts (the maximum is
and Dependent Care Tax
$5,000) in plan year ending in 2020 to the plan
Benefits: How They Work and
year ending in 2021. Currently, unused benefits
Who Receives Them, by
are forfeited. IRS regulations released on May 12,
Margot L. Crandal -Hol ick.
2020 (Notice 2020-29), al ow ful carryover
through calendar year 2020.
Congressional Research Service
14
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Carryover of Paid Time
Would permit employers to al ow participants in
For background, see
Off
cafeteria benefit plans (which al ow participants
CRS Committee Print
to choose from certain pretax benefits) to carry
CP10003, Tax Expenditures:
over al unused paid time off for plans ending in
Compendium of Background
2020 to plans ending in 2021. Currently, unused
Material on Individual
benefits are forfeited.
Provisions—A Committee Print
Prepared for the Senate
Committee on the Budget,
2018, by Jane G. Gravel e et
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Change in Election
Would permit employers to al ow participants to
For background, see
Amount
make changes to 2020 health flexible savings
CRS Committee Print
accounts without regard to changes in status or
CP10003, Tax Expenditures:
to paid time off during 2020. Currently such
Compendium of Background
elections must be made prior to the plan year
Material on Individual
and can only be changed with certain changes in
Provisions—A Committee Print
status. IRS regulations released on May 12, 2020
Prepared for the Senate
(Notice 2020-29), al ow elections for changes in
Committee on the Budget,
health and dependent care coverage during
2018, by Jane G. Gravel e et
calendar year 2020.
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Extension of Grace
Would al ow a benefits plan to retain its status as
For background, see
Periods, Etc.
a cafeteria plan, health flexible savings account, or
CRS Committee Print
dependent care account if the grace period for a
CP10003, Tax Expenditures:
2020 plan is extended to 12 months after the end
Compendium of Background
of the 2020 plan year. Would also permit
Material on Individual
employers to al ow employees who cease
Provisions—A Committee Print
participation (for example, because of
Prepared for the Senate
termination) to receive unused benefits for the
Committee on the Budget,
rest of the plan year including the grace period.
2018, by Jane G. Gravel e et
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Plan Amendments
Would al ow employers to make retroactive
For background, see
amendments to cafeteria plans, health flexible
CRS Committee Print
spending arrangements, and dependent care
CP10003, Tax Expenditures:
arrangements to permit the changes made in
Compendium of Background
these provisions.
Material on Individual
Provisions—A Committee Print
Prepared for the Senate
Committee on the Budget,
2018, by Jane G. Gravel e et
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Congressional Research Service
15
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Subtitle G—Deduction of State and Local Taxes
Elimination for 2020 and
Taxpayers that itemize their deductions may
For more, see
2021 of Limitation on
claim a deduction for certain state and local taxes CRS Report R46246, The
Deduction of State and
paid (the SALT deduction). The 2017 tax revision
SALT Cap: Overview and
Local Taxes
(P.L. 115-97) limited SALT deduction claims for
Analysis, by Grant A.
tax years 2018 through 2025, set to $10,000 for
Driessen and Joseph S.
single taxpayers and married couples filing jointly
Hughes.
and $5,000 for married taxpayers filing
separately. That law also excluded foreign real
CRS Report RL32781,
property taxes paid from SALT deduction claims
Federal Deductibility of State
over the same time frame.
and Local Taxes, by Grant A.
Driessen and Steven
Would repeal the SALT deduction limit for tax
Maguire.
years 2020 and 2021; would not modify the
foreign real property tax exclusion.
Title II—Additional Relief for Workers
Subtitle A—Additional Relief
Increase in Above-the-
Teachers are currently al owed an above-the-line
For background, see
Line Deduction for
deduction of up to $250 for unreimbursed out-
CRS Insight IN10021, The
Certain Expenses of
of-pocket supply costs, including books,
Deduction for Out-of-Pocket
Elementary and
computer equipment, software, and other
Teacher Expenses, by Mol y F.
Secondary School
supplemental classroom materials. This provision
Sherlock and Margot L.
Teachers
would permanently increase the deduction
Crandal -Hol ick.
amount to $500 starting in 2020, with the $500
amount adjusted for inflation over time.
Above-the-Line
Would provide first responders a permanent
Deduction Al owed for
above-the-line deduction al owing them to deduct
Certain Expenses of
up to $500 for unreimbursed uniform expenses
First Responders
or tuition and fees associated with professional
development courses related to service as a first
responder. First responders are defined as
employees who provide at least 1,000 hours of
service during the year as a law enforcement
officer, firefighter, paramedic, or emergency
technician. The deduction would be available
starting in 2020, with the $500 amount adjusted
for inflation over time.
Temporary Above-the-
Would al ow an above-the-line deduction in 2020
Line Deduction for
for unreimbursed uniform, supply, and equipment
Supplies and Equipment
expenses of COVID-19 front line employees.
of First Responders and
COVID-19 front line employees are defined as
COVID-19 Front Line
individuals performing at least 1,000 hours of
Employees
essential work in 2020. Essential work covers a
broad range of workers, defined in Division Q of
the HEROES Act, who general y have physical
interactions with persons or handle objects
handled by other persons or are employed in
essential industries (e.g., health care, first
responders, grocery stores, transportation).
Congressional Research Service
16
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Payrol Credit for
Would provide a refundable payrol tax credit for
Certain Pandemic-
pandemic-related employee benefit expenses. For
Related Employee
each employee, up to $5,000 in pandemic-related
Benefit Expenses Paid by
employee benefit expenses may be tax credit
Employers
eligible per quarter. For pandemic-related
essential employees, the tax credit amount is 50%
of benefit expenses paid (e.g., a tax credit of up
to $2,500 per quarter). The tax credit amount is
30% for other employees. The credit would be
available for pandemic-related employee benefit
expenses paid after March 12, 2020, and before
January 1, 2021.
A general fund transfer of revenue to the Old-
Age and Survivors Insurance Trust Fund, Federal
Disability Insurance Trust Fund, and Railroad
Retirement Trust Fund would be made to
maintain trust fund balances.
Subtitle B—Tax Credits to Prevent Business Interruption
Improvements to
Would modify the employee retention tax credit
For more, see
Employee Retention
to (1) increase the credit rate from 50% to 80%;
CRS Insight IN11299,
Credit
(2) increase the amount of wages that can qualify
COVID-19: The Employee
for the credit from $10,000 annual y to $15,000
Retention Tax Credit, by Mol y
per quarter (limited to $45,000 for the year); (3)
F. Sherlock.
modify credit limitations for large employers,
defining large employers as those with more than
1,500 ful -time employees in 2019 and gross
receipts of more than $41.5 mil ion in 2019
(rather than an employer with more than 100
employees); (4) al ow a partial credit for
businesses with a 10% to 50% decline in gross
receipts; and (5) al ow state and local
governments, and some federal instrumentalities,
to claim the credit.
Would apply retroactively to the effective date
provided in the CARES Act.
Congressional Research Service
17
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Payrol Credit for
Would provide a refundable payrol tax credit for
Certain Fixed Expenses
employers’ fixed costs, including rent or
of Employers Subject to
mortgage obligations and utility payments. A tax
Closure by Reason of
credit of 50% could be claimed on qualifying fixed
COVID-19
expenses. Qualifying expenses limited to the
lesser of qualified fixed expenses paid in the same
calendar quarter in 2019; $50,000; or the greater
of 25% of wages paid or 6.25% of gross receipts
during the same calendar quarter in 2019.
Eligible employers would be those with no more
than 1,500 ful -time employees in 2019 and gross
receipts of no more than $41.5 mil ion in 2019
who had operations ful y or partial y suspended
due to COVID-19 or who had a significant
decline in gross receipts (gross receipts were less
than 90% of gross receipts for the same calendar
quarter in 2019). Credit is available at a reduced
rate (or phases in) for employers with a decline
in gross receipts between 10% and 50%. Credit
could be claimed for fixed expenses paid or
accrued after March 12, 2020, and before January
1, 2021.
A general fund transfer of revenue to the Old-
Age and Survivors Insurance Trust Fund, Federal
Disability Insurance Trust Fund, and the Railroad
Retirement Trust Fund would be made to
maintain trust fund balances.
Business Interruption
Eligible self-employed individuals who have
Credit for Certain Self-
experienced a significant loss in income would be
Employed Individuals
al owed a refundable income tax credit. The
credit rate is 90%. The base of the credit is the
loss in self-employment income that exceeds a
10% reduction from 2019 to 2020, scaled using
the ratio of net self-employment earnings to self-
employment gross income in 2019. The
maximum amount of self-employment income
that can be taken into account in computing the
credit is the lesser of $45,000 or the reduction in
adjusted gross income (AGI) from 2019 to 2020.
The credit phases out at a rate of $50 for every
$100 of income once modified AGI exceeds
$60,000 ($120,000 for joint filers).
Subtitle C—Credits for Paid Sick and Family Leave
Extension of Credits
The Families First Coronavirus Response Act
For more, see
(FFCRA; P.L. 116-127) includes refundable payrol
CRS Insight IN11243, Tax
tax credits for certain required paid sick and
Credit for Paid Sick and Family
family leave for 2020. This provision would
Leave in the Families First
extend the tax credits through 2021.
Coronavirus Response Act
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Congressional Research Service
18
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Repeal of Reduced Rate
The payrol tax credit for paid sick leave wages in
For more, see
of Credit for Certain
FFCRA is limited to $200 per day for certain
CRS Insight IN11243, Tax
Leave
qualified leave taking, general y caring for an
Credit for Paid Sick and Family
individual affected by COVID-19 or caring for
Leave in the Families First
their child whose school or place of care is
Coronavirus Response Act
unavailable due to COVID-19. The credit is
(H.R. 6201) (Updated), by
limited to $511 per day if employees are taking
Mol y F. Sherlock.
other forms of qualified sick leave, general y for
their own COVID-19 related purposes. This
provision would increase the maximum tax credit
to $511 for al sick leave purposes in FFCRA.
Increase in Limitations
The tax credit for family leave wages is limited to
For more, see
on Credits for Paid
$200 per day, and $10,000 total per employee.
CRS Insight IN11243, Tax
Family Leave
For self-employed individuals, the family leave
Credit for Paid Sick and Family
credit is limited to 50 days. This provision would
Leave in the Families First
increase the total credit amount to $12,000 per
Coronavirus Response Act
employee, and al ow self-employed individuals to
(H.R. 6201) (Updated), by
claim the credit for up to 60 days. This provision
Mol y F. Sherlock.
is effective as if included in FFCRA.
Election to Use Prior-
Average daily self-employment income is an
For more, see
Year Net Earnings from
amount equal to the net earnings from self-
CRS Insight IN11243, Tax
Self-Employment in
employment for the taxable year divided by 260.
Credit for Paid Sick and Family
Determining Average
This provision would al ow individuals to elect to
Leave in the Families First
Daily Self-Employment
use average daily self-employment income from
Coronavirus Response Act
Income
2019, instead of 2020, to compute the credit.
(H.R. 6201) (Updated), by
This provision is effective as if included in FFCRA.
Mol y F. Sherlock.
Federal, State, and Local
The payrol tax credits for paid sick and family
For more, see
Governments Al owed
leave in FFCRA do not apply to federal, state, or
CRS Insight IN11243, Tax
Tax Credits for Paid Sick
local government employers, or any agency or
Credit for Paid Sick and Family
and Paid Family and
instrumentality of such governments.
Leave in the Families First
Medical Leave
Government employers are subject to new sick
Coronavirus Response Act
and family leave requirements in FFCRA. This
(H.R. 6201) (Updated), by
provision would al ow government employers to
Mol y F. Sherlock.
claim payrol tax credits for required sick and
family leave. This provision is effective as if
included in FFCRA.
Certain Technical
Technical changes would coordinate the
For more, see
Improvements
definitions of qualified wages for paid sick leave,
CRS Insight IN11243, Tax
paid family and medical leave, and the exclusion
Credit for Paid Sick and Family
of such leave from employer Old-Age, Survivors,
Leave in the Families First
and Disability Insurance (OASDI) tax. This
Coronavirus Response Act
provision is effective as if included in FFCRA.
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Credit Not Al owed to
This provision would provide that private-sector
For more, see
Certain Large Employers
employers with 500 or more employees are not
CRS Insight IN11243, Tax
eligible for tax credits for paid sick or family
Credit for Paid Sick and Family
leave. This restriction would not apply to federal,
Leave in the Families First
state, or local government employers. The
Coronavirus Response Act
provision would apply to wages paid after the
(H.R. 6201) (Updated), by
date of enactment.
Mol y F. Sherlock.
Subtitle D—Other Relief
Congressional Research Service
19
link to page 23 Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Payrol Tax Deferral
Would al ow businesses receiving Paycheck
For more, see
Al owed For Recipients
Protection Program loan forgiveness to defer
CRS Insight IN11260,
of Certain Loan
payment of payrol taxes under Section 2302 of
COVID-19 Economic Stimulus:
Forgiveness
the CARES Act.
Business Payrol Tax Cuts, by
Mol y F. Sherlock and
Donald J. Marples.
For general information on the
Paycheck Protection Program,
see
CRS Report R46284, COVID-
19 Relief Assistance to Smal
Businesses: Issues and Policy
Options, by Robert Jay
Dilger, Bruce R. Lindsay, and
Sean Lowry.
Emergency Financial Aid
Would exclude postsecondary emergency
For more information on CARES
Grants
financial aid grants awarded in response to the
Act Higher Education Provisions,
coronavirus emergency from gross income. Thus,
see
these grants would not be taxable. Excluded
CRS In Focus IF11497,
emergency financial aid would not reduce
CARES Act Higher Education
qualified expenses for the purposes of calculating
Provisions, coordinated by
the American Opportunity Tax Credit, Lifetime
Cassandria Dortch.
Learning Credit, or Tuition and Fees Deduction.
General y, education expenses used to calculate
these three tax benefits must be reduced by any
tax-free financial aid (i.e., excluded from gross
income), which may reduce the value of these tax
benefits.b
Certain Loan
Loan forgiveness for additional lenders to
For more on the Payment
Forgiveness and Other
participate in the Payment Protection Program,
Protection Program, see
Business Financial
advance payments for Emergency Injury Disaster
CRS Report R46284, COVID-
Assistance under CARES Loan (EIDL) grants, and payments of principle,
19 Relief Assistance to Smal
Act Not Includable in
interest, and fees on behalf of borrowers under
Businesses: Issues and Policy
Gross Business Income
covered loans, al authorized in the CARES Act,
Options, by Robert Jay
would not be included in gross income for tax
Dilger, Bruce R. Lindsay, and
purposes.
Sean Lowry.
For more on the EIDL program,
see
CRS Insight IN11370, SBA
EIDL and Emergency EIDL
Grants for COVID-19, by
Bruce R. Lindsay.
Authority to Waive
Would provide the Secretary of the Treasury
For more on the Payment
Certain Information
with the authority to waive information reporting
Protection Program, see
Reporting Requirements
requirements with respect to income that is
CRS Report R46284, COVID-
exempt from tax as excludible loan forgiveness
19 Relief Assistance to Smal
under the Paycheck Protection Program or under
Businesses: Issues and Policy
the exclusions for emergency financial grants for
Options, by Robert Jay
students, or the loans for additional lenders,
Dilger, Bruce R. Lindsay, and
EIDL, and payments of principle, interest and fees
Sean Lowry.
for covered loans.
Congressional Research Service
20
Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Clarification of
This section clarifies that expenses paid out of
For more, see
Treatment of Expenses
forgiven loans under the Payment Protection
CRS Insight IN11378, IRS
Paid or Incurred with
Program or other related payments that are
Guidance Says No Deduction
Proceeds from Certain
excluded from income would be deductible. This
Is Al owed for Business
Grants and Loans
legislation reverses recent Internal Revenue
Expenses Paid with Forgiven
Service guidance (Notice 2020-32) that held
PPP Loans, by Sean Lowry
these expenses were not deductible.
and Jane G. Gravel e.
Reinstatement of
Would repeal certain provisions of the CARES
Certain Protections for
Act that amended the Fostering Undergraduate
Taxpayer Return
Talent by Unlocking Resources for Education
Information
(FUTURE) Act (P.L. 116-91).
These specific CARES Act provisions:
(i) al ow for Department of Education and its
contractors to re-disclose specified IRS returns
and return information to designated persons,
who are not subject to certain taxpayer return
protection obligations, solely for the use in
financial aid programs; and
(i ) eliminate the requirement that the IRS
maintain a permanent system of standardized
records or accountings of al disclosures and re-
discloses made to carry out the Higher Education
Act of 1965.
Title III—Net Operating Losses
Limitation on Excess
Would reinstitute the limits on noncorporate
For more, see
Business Losses of
business losses that existed prior to the CARES
CRS Insight IN11240,
Noncorporate
Act and would make the limits permanent. The
COVID-19: Potential Role of
Taxpayers Restored and
changes would apply to taxable years beginning
Net Operating Loss (NOL)
Made Permanent
on or after January 1, 2018.
Carrybacks in Addressing the
Prior to the CARES Act, under revisions made by
Economic Effects, by Mark P.
P.L. 115-97 (commonly referenced as the Tax
Keightley.
Cuts and Jobs Act [TCJA]), pass-through business
owners could use losses to offset other
CRS Insight IN11296, Tax
Treatment of Net Operating
nonbusiness income up to an annual limit:
Losses (NOLs) in the
$250,000 (single filers) or $500,000 (married
Coronavirus Aid, Relief, and
filers). Losses above these limits were considered
Economic Security (CARES)
excess business losses and could be carried
Act, by Jane G. Gravel e.
forward indefinitely subject to the more general
rules for net operating losses (NOLs). These
limits on excess business losses are scheduled to
expire after 2025, at which time businesses wil
not be limited in the amount of nonbusiness
income they may offset with business losses.
The CARES Act suspended the
$250,000/$500,000 limits on offsetting
nonbusiness income for 2018, 2019, and 2020.
Congressional Research Service
21
link to page 10 link to page 3 Heroes Act: Revenue Provisions
Section Title
Description
CRS Resources
Certain Taxpayers
This provision would limit the carryback of NOLs
For more, see
Al owed Carryback of
to losses incurred in 2019 and 2020. Losses could CRS Insight IN11240,
Net Operating Losses
be carried back until 2018. Businesses with
COVID-19: Potential Role of
Arising in 2019 and 2020 excessive employee compensation under IRC
Net Operating Loss (NOL)
162(m), golden parachute payments under IRC
Carrybacks in Addressing the
280G, or excessive dividend payment and stock
Economic Effects, by Mark P.
buybacks would be prohibited from carrying back
Keightley.
2019 and 2020 losses.
CRS Insight IN11296, Tax
Under the temporary revisions enacted by the
Treatment of Net Operating
CARES Act, businesses are currently al owed to
Losses (NOLs) in the
carry back losses generated in calendar years
Coronavirus Aid, Relief, and
2018, 2019, and 2020 to up to the five years
Economic Security (CARES)
preceding the loss year. The CARES Act
Act, by Jane G. Gravel e.
suspended the limit to 80% of taxable income for
those years. After 2020, NOLs can only be
carried forward and are limited to 80% of taxable
income, under the rules adopted in the TCJA.
Source: CRS analysis of The Heroes Act (H.R. 6800).
Notes: Table 2 appears here as it appeared in the version of this report published on May 15, 2020. CRS
resources that were published after May 15, 2020, that are related to provisions in the September 28, 2020
version of the Heroes Act, are noted in Table 1.
a. The legislation includes as part of the definition of a student someone carrying half or more of the normal
ful -time work load for their program of study, as defined under IRC §25A(b)(3).
b. On May 7, 2020, the IRS provided similar but less expansive guidance to the same effect. See IRS, “FAQs:
Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act,” at
https://www.irs.gov/newsroom/faqs-higher-education-emergency-relief-fund-and-emergency-financial-aid-
grants-under-the-cares-act.
Author Information
Molly F. Sherlock, Coordinator
Jane G. Gravelle
Specialist in Public Finance
Senior Specialist in Economic Policy
Margot L. Crandall-Hollick
Mark P. Keightley
Acting Section Research Manager
Specialist in Economics
Grant A. Driessen
Donald J. Marples
Analyst in Public Finance
Specialist in Public Finance
Congressional Research Service
22
Heroes Act: Revenue Provisions
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Congressional Research Service
R46358 · VERSION 5 · UPDATED
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