December 22, 2020

Extension of CARES Act Unemployment Provisions

Section 201. Extension and Benefit Phaseout Rule for Pandemic Unemployment Assistance.

• Extends Pandemic Unemployment Assistance (PUA) to March 14, 2021 and allows individuals receiving benefits as of March 14, 2021 to continue through April 5, 2021, as long as the individual has not reached the maximum number of weeks.
• Increases the number of weeks of benefits an individual may claim from 39 to 50.
• Provides for appeals to be at the state level.
• Provides states authority to waive overpayments made without fault on the part of the individual or when such repayment would violate equity and good conscience.
• Provides a transition rule for certain individuals transitioning between PUA and the Pandemic Emergency Unemployment Compensation program.
• Limits payment of retroactive PUA benefits to weeks of unemployment after December 1, 2020.

Section 202. Extension of Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations. — Extends through March 14, 2021 a provision in the CARES Act which amended the Families First Coronavirus Response Act to provide federal support to cover 50% of the costs of unemployment benefits for employees of state and local governments and non-profit organizations.

Section 203. Extension of Federal Pandemic Unemployment Compensation. – Restores the Federal Pandemic Unemployment Compensation (FPUC) supplement to all state and federal unemployment benefits at $300 per week, starting after December 26 and ending March 14, 2021.

Section 204. Extension of Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week. Extends through March 14, 2021 the CARES Act provision which reimbursed states for the cost of waiving the “waiting week” for regular unemployment compensation. Sets the reimbursement percentage for weeks ending after December 26, 2020 at 50 percent.

Section 206. Extension and Benefit Phaseout Rule for Pandemic Emergency Unemployment Compensation.

• Extends Pandemic Emergency Unemployment Compensation (PEUC) to March 14, 2021 and allows individuals receiving benefits as of March 14, 2021 to continue through April 5, 2021, as long as the individual has not reached the maximum number of weeks.
• Increases the number of weeks of benefits an individual may claim through the PEUC program from 13 to 24.
• Provides rules for states about sequencing these benefits with other unemployment benefits.

Secs. 272-273. Additional 2020 recovery rebates for individuals. – The provision provides a refundable tax credit in the amount of $600 per eligible family member. The credit is $600 per taxpayer ($1,200 for married filing jointly), in addition to $600 per qualifying child. The credit phases  out starting at $75,000 of modified adjusted gross income ($112,500 for heads of household and $150,000 for married filing jointly) at a rate of $5 per $100 of additional income.

The provision also provides for Treasury to issue advance payments based on the information on 2019 tax returns. Eligible taxpayers treated as providing returns through the non-filer portal in the first round of Economic Impact Payments, provided under the CARES Act, will also receive payments. Treasury may issue advance payments for Social Security Old-Age, Survivors, and Disability Insurance beneficiaries, Supplemental Security Income recipients, Railroad Retirement Board beneficiaries, and Veterans Administration beneficiaries who did not file 2019 returns based on information provided by the Social Security Administration, the Railroad Retirement Board, and the Veterans Administration.

In general, taxpayers without an eligible social security number are not eligible for the payment. However, married taxpayers filing jointly where one spouse has a Social Security Number and one spouse does not are eligible for a payment of $600, in addition to $600 per child with a Social Security Number.

The provision aligns the eligibility criteria for the new round of Economic Impact Payments and the credit for the Economic Impact Payments provided by the CARES Act. Taxpayers receiving an advance payment that exceeds the amount of their eligible credit will not be required to repay any amount of the payment. If the amount of the credit determined on the taxpayer’s 2020 tax return exceeds the amount of the advance payment, taxpayers will receive the difference as a refundable tax credit.

Sec. 274. Extension of certain deferred payroll taxes. On August 8, 2020, the President of the United States issued a memorandum to allow employers to defer withholding employees’ share of social security taxes or the railroad retirement tax equivalent from September 1, 2020 through December 31, 2020, and required employers to increase withholding and pay the deferred amounts ratably from wages and compensation paid between January 1, 2021 and April 31, 2021. Beginning on May 1, 2021, penalties and interest on deferred unpaid tax liability will begin to accrue. The provision extends the repayment period through December 31, 2021. Penalties and interest on deferred unpaid tax liability will not begin to accrue until January 1, 2022.