Washington Update on COVID-19

As we continue to monitor the latest developments on COVID-19, there are two important updates today that we wanted to pass along your way. First, the IRS today expanded the deadline for tax filing to July 15 from the traditional date of April 15. Second, the Senate is poised to vote on Phase Three of Relief which has tax provisions and relief for small businesses across our country – including our industry. More on that below.

We are working with our team in Washington to give you the most comprehensive updates and provide you with all of the necessary resources as we navigate these turbulent times. Please continue to watch your inbox and check our advocacy website, www.SaveOurFireworks.com for the latest links and information that can be relevant to you. Of course, you can also find current information on our social media platforms on Facebook and following the NFA on Twitter at @NFASafety.

Yesterday, we posted on our website the latest information from the U.S. Small Business Administration on guidance and loan resources for your business.

Here is the latest legislative update on what’s happened in Washington. First, the Congress passed, and the President signed into law an $8.3 billion emergency supplemental for the procurement of medical equipment, supplies, and other resources so that the Federal government is better prepared to respond to the crisis. Increases the maximum 7(a) loan amount to $10 million through December 31, 2020.

Secondly, the Congress passed, and the President signed into law was the Families First Coronavirus Response Act. This was to provide paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers.

The Senate is poised to begin debate and will vote in the next week on Phase 3 of the Federal government’s response to COVID-19. The bill they’re considering is S. 3548 – the Coronavirus Aid Relief and Economic Security (CARES) Act.

The following are highlights of the CARES Act:


The Senate Small Business Committee has written provisions dealing with lending for your small business.

7(a) Loan Program

• Defines the covered loan period as beginning on March 1, 2020 and ending on December 31, 2020.
• Defines eligible businesses as those businesses with 500 employees or less, unless the covered industry’s SBA size standard allows more than 500 employees.
• Allows not for profit entities to be eligible for loans made under this Act.
• Expands allowable uses of 7(a) loans to include payroll support, such as paid sick or medical leave, employee salaries, mortgage payments, and any other debt obligations.
• Waives both borrower and lender fees for 7(a) loans.
• Increases the government guarantee of 7(a) loans to 100 percent through December 31, 2020, at which point guarantee percentages will return to 75 percent for loans exceeding $150,000 and 85 percent for loans equal to or less than $150,000.
• Increases the maximum loan for an SBA Express loan from $350,000 to $1 million through
• December 31, 2020, after which point the Express loan will have a maximum of $500,000.

Loan Forgiveness

• Provides a process by which borrowers who receive this loan to be eligible for loan forgiveness in an amount equal to the payroll cost and costs related to debt obligations for the period of March 1, 2020 through June 30, 2020.
• The amount of the loan eligible for forgiveness will be reduced proportionally by the number of employees laid off during this period relative to the borrower’s prior employment levels.
• For the purposes of determining forgiveness amounts, payroll costs will exclude the compensation of any employees in excess of $100,000 in annualized compensation and qualified sick leave and qualified family leave wages enacted by the Families First Coronavirus Response Act.
• Lenders would verify payroll costs and payments made on debt obligations.
• Forgiveness amounts would not be included in taxable income.

The Senate Finance Committee has written provisions that will affect your taxes

Section 2201: Delay of estimated tax payments for corporations
The provision allows corporations to postpone estimated tax payments due after the date of enactment until October 15, 2020. There is no cap on the amount of tax payments postponed. This delay will provide critical cash flow to help businesses maintain operations and continue paying employees during the COVID-19 emergency. 

Section 2202: Delay of payment of employer payroll taxes
The provision allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. All employers are responsible for paying a 6.2-percent Social Security tax on employee wages. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. The Social Security Trust Funds will be held harmless under this provision.

Section 2203: Modifications for net operating losses
The provision relaxes the limitations on a company’s use of losses from prior years. NOLs are currently subject to a taxable income limitation, and they cannot be carried back to reduce income in a prior tax year. This provision provides that a loss from 2018, 2019, or 2020 can be carried back five years. The provision also temporarily removes the taxable income limitation to allow an NOL to fully offset income. These changes will allow companies to utilize losses and amend prior years’ returns, which will provide critical cash flow and liquidity during the COVID-19 emergency.


The Senate Health, Education, Labor, and Pensions Committee has written provisions that deal with your employees

Section 4601: Limitation on Paid Family and Medical Leave
Creates a limitation stating an employer shall not be required to pay more than $200 per day and $10,000 in the aggregate for each employee under this section.

Section 4602: Limitation on Paid Sick Leave
Creates a limitation stating an employer shall not be required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $200 per day and $2,000 in the aggregate to care for a quarantined individual or child for each employee under this section.

Section 4603: Regulatory Authorities under the Emergency Paid Sick Leave Act
Expands the authority for the Secretary of Labor to regulate to exempt small businesses with fewer than 50 employees from paid leave provisions in the section.

Section 4606: Paid Family and Medical Leave for Rehired Employees
Allows an employee who was laid off by an employer March 1, 2020, or later to have access to paid family and medical leave in certain instances if they are rehired by the employer. Employee would have had to work for the employer at least 30 days prior to being laid off.

Section 4607: Advance of Paid Leave Tax Credit
Allows employers and self-employed to receive an advance tax credit from Treasury instead of having to be reimburse on the back end. Creates regulatory authority to implement the tax credit advances.