COVID-19: Summary of Direct Payments in the American Workers, Families, and Employers Assistance Act (S. 4318)

COVID-19: Summary of Direct Payments in the American Workers, Families, and Employers Assistance Act (S. 4318)

INSIGHTi
COVID-19: Summary of Direct Payments in
the July 27 Senate Proposal
July 28, 2020
A draft bil text circulated by the Senate Finance Committee on July 27, 2020, includes a second round of
direct payments to help al eviate the economic effects associated with the Coronavirus Disease 2019
(COVID-19) pandemic. (The text is entitled the American Workers, Families, and Employers Assistance
Act.) The text also includes modifications to the first round of direct payments enacted in the
Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). This Insight provides a
brief overview of the proposed second round of payments, as wel as a comparison to the enacted CARES
Act payments and those proposed in the Heroes Act (H.R. 6800).
Direct Payments
The proposed second round of direct payments would equal $1,200 per eligible individual ($2,400 for
married individuals filing a joint tax return), plus an additional $500 per eligible dependent, phased down
for higher-income taxpayers. In contrast to the CARES Act payments, which were effectively limited to
dependents under age 17, eligible individuals could receive the $500 amount for all dependents. This
more expansive definition includes an estimated 20.4 mil ion dependents who are 17 years old and
older—including older children, students, and adult dependents.
Like the CARES Act payments, these payments would be nominal y structured as a new one-time
refundable tax credit for 2020 that would be automatical y advanced so that payments would be received
this year, as opposed to 2021 (when 2020 income tax returns wil be filed). Hence, the Internal Revenue
Service (IRS) would general y issue these payments automatical y in 2020 based on 2019 tax return data,
or if unavailable, 2018 income tax return data.
As with the CARES Act payments, recipients of Social Security, Supplemental Security Income (SSI),
Railroad Retirement, or certain VA benefits who have not filed a recent federal income tax return would
be eligible to receive these payments automatical y. Unlike the CARES Act, the bil would also direct the
IRS to automatical y issue payments to al eligible nonfilers who received benefits from these programs
prior to this bil ’s enactment, not just to those who received benefits in 2019. In addition, the bil would
expressly authorize the issuance of payments to representative payees or fiduciaries on behalf of eligible
program recipients, as wel as clarify that the payments are only for the benefit of suc h recipients.
Congressional Research Service
https://crsreports.congress.gov
IN11473
CRS INSIGHT
Prepared for Members and
Committees of Congress

link to page 2 link to page 2 link to page 3 Congressional Research Service
2
Other major differences between these payments and the CARES Act payments are summarized in Table
1 and include the following:
 Deceased individuals: Individuals who died before January 1, 2020, would be ineligible
for these payments. This provision would apply to the CARES Act payments.
 Prisoners: Certain individuals who are incarcerated (as defined under 42 U.S.C.
402(x)(1)(A)) at the time the payment is processed would be ineligible for these
payments in 2020. This provision would apply to the CARES Act payments.
 Garnishment or levy for past-due debts: These payments would be general y be
protected from certain debt collection actions by certain creditors (such as certain
garnishments or levies), including private creditors. These types of actions general y
occur after payments have been issued. These protections would also apply to certain
CARES Act payments.
Table 1. Major Provisions of Direct Payments in the July 27 Proposal
Compared to CARES Act Payments and Proposed Heroes Act Payments
Proposed Heroes Act

July 27th Proposal
CARES Act Payments
Payments
Payment
Same as CARES Act
$1,200 payments for eligible
Same as CARES Act
amount

individuals ($2,400 for married

joint filers).

Additional $1,200 for each
Additional $500 for each
Additional $500 for each
dependent (al qualifying children
dependent (al qualifying children
dependent child under 17 years
and qualifying relatives).
and qualifying relatives).
old (as defined for the child
credit).
Phaseout
Same as CARES Act
Total amount phases out by 5%
Same as CARES Act
of adjusted gross income over
thresholds:
$75,000 singles
$112,500 head of households
$150,000 married joint filers
Eligibility
Everyone except:
Everyone except:
Same as CARES Act

Nonresident aliens

Nonresident aliens


Dependents of other

Dependents of other

taxpayers
taxpayers


Individuals who died before

January 1, 2020


Incarcerated individuals as

defined under 42 U.S.C.

402(x)(1)(A)a

Dependents eligible for $500
Dependents eligible for $500
Dependents eligible for $500
amount are those defined for the
amount are those defined under
payment are those defined for
dependent exemption.
IRC §24(c) for the child tax
the dependent exemption.

credit.
Ineligibility for deceased and
incarcerated individuals would
also apply to the CARES Act
payments.

Congressional Research Service
3
Proposed Heroes Act

July 27th Proposal
CARES Act Payments
Payments
ID
Same as CARES Act
Al eligible individuals and
Al eligible individuals and
requirement

qualifying children must have a
qualifying children must have a

work-authorized Social Security
SSN or ITIN for the household

Number (SSN) for the household to receive the payment.

to receive a payment.

Households in which at least one
ITINs are issued by the Internal
otherwise eligible individual does
Revenue Service (IRS) to
not have an SSN—and instead
taxpayers who are not eligible for
uses an Individual Taxpayer
an SSN so that they can comply
Identification Number (ITIN)—
with federal tax law. ITIN users
are ineligible for the payments.
include many noncitizens who are
(Exception for certain married
unlawful y present or
members of the Armed Forces.)
unauthorized to work in the

United States.

Adoption taxpayer IDs (ATINs)
Adoption taxpayer IDs (ATINs)
may also be used for adopted
could also be used for adopted
children.
children.
Offset and
Same as CARES Act
The CARES Act payments cannot Same as CARES Act, except
Reduction for

be offset (reduced before being
these payments cannot be offset
Past-Due
issued) to satisfy certain debts
for child support debt.
Debts
In addition, these payments
owed to governmental agencies,
would be general y exempt from

such as tax debts or
debt col ection actions, such as
unemployment compensation
In addition, these payments
garnishment or levy, that occur
debts.
would general y be exempt from
once payments are in accounts
debt col ection actions, such as
(i.e., after payments are issued).
These payments can be offset for
garnishment or levy, that occur
child support debt.
This garnishment/levy provision
once payment are in accounts
would also apply to certain
(i.e., after payments are issued).
CARES Act payments.
Sources: CRS Analysis of the July 27 draft text, the HEROESs Act (H.R. 6800) and the CARES Act (P.L. 116-136).
Notes: Estates and trusts are ineligible to receive the CARES Act payments, and would also be ineligible under the
HEROES Act and the July 27 proposal. The proposed payments would be extended to the territories in a manner similar
to CARES Act payments. In addition, like the CARES Act, the proposed legislation includes a public awareness campaign
and additional appropriations to Treasury and the Social Security Administration to administer these payments.
a. These individuals would also be ineligible to receive these payments as a tax credit claimed on their 2020 income tax
returns if they were considered incarcerated (as defined under 42 U.S.C. 402(x)(1)(A)) for al of 2020.

Author Information

Margot L. Crandall-Hollick

Acting Section Research Manager

Congressional Research Service
4

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

IN11473 · VERSION 1 · NEW