INSIGHT: Historic CARES Act Will Have Significant Impact on Companies, Individuals

The novel coronavirus referred to as SARS-CoV-2 and the disease that the virus causes (Covid-19) has created significant challenges for companies and individuals across the U.S. as quarantine, self-isolation, and travel restrictions have been implemented globally.

The U.S. government has responded by enacting three separate pieces of legislation: the first involved appropriations and emergency funding for federal agencies to respond to the coronavirus outbreak; the second legislation, the Families First Coronavirus Response Act (Response Act), became effective on April 1, 2020, and relates to the paid sick leave and family leave certain employers are required to provide (please see White & Case’s separate guidance here regarding this legislation); and the third legislation, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, provides, among other things, the following economic relief to companies and individuals through changes in the tax code.

SIGNIFICANT CHANGES TO TAX RULES FOR BUSINESSES

Net Operating Losses

The CARES Act modifies certain limitations imposed by the Tax Cuts and Jobs Act (TCJA) on a taxpayer’s ability to deduct net operating losses (NOLs). Under the TCJA, the deductibility of NOLs arising in taxable years beginning after Dec. 31, 2017, generally is limited to 80% of the taxpayer’s taxable income (determined without taking into account the NOL deduction). Further, a taxpayer cannot carry back NOLs arising in such taxable years to prior taxable years, but may carry forward such NOLs indefinitely to future taxable years.

The CARES Act relaxes the taxable income limitation and carryback limitation on a taxpayer’s use of NOLs. Under the CARES Act, the taxable income limitation is temporarily suspended with retroactive effect, allowing NOLs (whether arising in or carried forward to taxable years beginning in 2018, 2019, or 2020) to fully offset the taxpayer’s taxable income for taxable years beginning before Jan. 1, 2021. Additionally, the CARES Act provides that NOLs arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021, generally may be carried back five years. Special rules would apply to real estate investment trusts and life insurance companies. Under the CARES Act, a U.S. shareholder of certain specified foreign corporations may not carry back net operating losses to offset any additional amount includible in its gross income by reason of tax code Section 965(a), a transition tax provision added by the TCJA. The taxpayer may elect, however, to exclude the taxable year in which such amounts are includible in its gross income from the five-year carryback period.

The CARES Act also contains a retroactive technical correction to the TCJA, providing that the carryback limitation under the TCJA shall apply to taxable years beginning after Dec. 31, 2017 (rather than taxable years ending after Dec. 31, 2017). This correction would allow NOLs arising in a taxable year beginning in 2017 and ending in 2018 to be carried back for two years.

In non-public acquisition transactions, there are often covenants in the transaction agreement relating to the buyer’s obligation to pay to the sellers pre-closing tax refunds and the value of other tax benefits arising as a result of the transaction (often referred to as transaction tax benefits). These changes to the NOL rules may impact those obligations, so parties to such transaction agreements should consider reviewing the relevant provisions to determine whether additional rights or obligations will accrue because of the CARES Act.

Taxpayers should also consider the potential impact of the carryback of NOLs on any deductions or credits previously claimed. For example, certain taxpayers are entitled to the 50% deduction relating to its “global intangible low-taxed income” (GILTI) or the 37.5% deduction relating to its “foreign-derived intangible income” (FDII) allowed under Section 250 (collectively, the “Section 250 deductions”). Section 250 deductions, however, will be reduced in the event the sum of the taxpayer’s GILTI and FDII exceeds its taxable income (which would be calculated after taking into account NOLs). Therefore, while taxpayers may expect to carry back NOLs to reduce their taxable income for prior years and receive a full refund, carrying back NOLs to 2018 or 2019 may potentially reduce or eliminate any previously-claimed Section 250 deductions in such years for these taxpayers (especially U.S. multinationals), resulting in refunds of amounts lower than expected.

Modification of Section 163(j) limitation on business interest expense for 2019 and 2020

Section 163(j) limits a taxpayer’s deduction for net business interest expense to 30% of the taxpayer’s “adjusted taxable income” or “ATI” for the taxable year (which is approximately equal to EBITDA for taxable years beginning before Jan. 1, 2022). The CARES Act makes two temporary changes to Section 163(j) that should materially increase the amount of deductions available to taxpayers with indebtedness and significantly increase their available after-tax cash.

Election to use 2019 ATI for 2020. Because taxpayers may have significantly reduced ATI in 2020, the CARES Act allows taxpayers (at their election) to use their ATI for their last taxable year beginning in 2019 for purposes of computing the Section 163(j) interest expense limitation for their first taxable year beginning in 2020, which may dramatically increase the amount of interest expense deductions available to the taxpayer. In the case of a partnership, this election is made at the level of the partnership (rather than at the partner level). For a taxpayer who makes this election and whose first taxable year beginning in 2020 is a short taxable year, the taxpayer’s 2019 ATI must be reduced pro rata based on the number of months in the short taxable year for purposes of computing the taxpayer’s 2020 Section 163(j) limitation.

Increase in limitation to 50% of ATI. The CARES Act generally increases the Section 163(j) limitation from 30% to 50% of ATI for taxable years beginning in 2019 and 2020. Taxpayers may elect out of the increase in limitation for any taxable year, but the election is irrevocable. In the case of a partnership, a special rule applies for taxable years beginning in 2019 (discussed below), and the election out of this increase to the Section 163(j) limit for taxable years beginning in 2020 is made by the partnership (rather than its partners).

Under existing law, partnerships are generally subject to the Section 163(j) limitation at the partnership level. Any disallowed business interest expense of the partnership is allocated to the partners and must be carried forward until the partner is allocated either excess ATI or excess business interest income from the partnership. For taxable years beginning in 2019, although a partnership’s net business interest expense deduction would remain limited to 30% of its ATI, each partner of the partnership would be able to deduct half of its allocable share of the partnership’s excess business interest expense without limitation in the partner’s first taxable year beginning in 2020. (The other half of the partner’s allocable share of excess business interest expense would be subject to the general rule and be carried forward until the partnership produces excess ATI or excess business interest income.) A partner could elect not to apply this special rule with respect to its allocable share of excess business interest expense, in which case the ordinary limitation on its ability to deduct excess business interest expense would apply.

While these modifications to the interest expense limitation generally would be expected to provide a substantial benefit to most taxpayers, the election out of the increase may be beneficial in some circumstances. Taxpayers (U.S. multinationals in particular) should carefully consider their specific circumstances in determining whether a greater interest deduction for 2019 and 2020 would be desirable (For example, whether the additional interest expense deductions may have adverse consequences relating to the base erosion and anti-abuse tax under Section 59A or GILTI.)

Acceleration of refund for prior year minimum tax liability of corporations

The CARES Act accelerates the refundable “alternative minimum tax” or “AMT” credit recovery schedule for corporate taxpayers and provides that the remaining balance of a corporate taxpayer’s unused AMT credits may be fully recovered by a refund claim either with respect to its taxable year beginning in 2019 or (at the taxpayer’s election) with respect to its taxable year beginning in 2018.

As background, although the corporate AMT was repealed by the TCJA, a corporate taxpayer is permitted to apply its AMT credits with respect to prior taxable years against its taxable income. These unused corporate AMT credits are available as refundable credits that, prior to the CARES Act were, recoverable over several years ending in the taxable year beginning in 2021. The CARES Act accelerates the recovery of these refundable credits.

Bonus depreciation for ‘qualified improvement property’

The CARES Act amends Section 168(e) to provide that qualified improvement property (QIP), which is an improvement to the interior of a nonresidential building that is placed in service after the building was placed in service, has a 15-year recovery period under the accelerated cost recovery system, and which would cause it to be eligible for “bonus depreciation” under Section 168(k). This change applies retroactively to property placed in service after Dec. 31, 2017.

The TCJA expanded the “bonus depreciation” regime of Section 168(k) to permit taxpayers to expense 100% of the basis of certain property in the taxable year the property is placed in service. The legislative history of the TCJA indicated that lawmakers anticipated assigning QIP a recovery period of 20 years or less to make it eligible for bonus depreciation. The final legislation, however, failed to classify QIP as 15-year property, and it consequently was subject to the 39-year recovery period that generally applies to nonresidential real property and therefore was ineligible for bonus depreciation. The CARES Act fixes this technical glitch and allow QIP to be eligible for bonus depreciation.

No repeal of downward attribution

Background. Prior to the TCJA, Section 958(b)(4) provided that the downward attribution rules contained in subparagraphs (A), (B), and (C) of Section 318(a)(3) did not apply to treat a U.S. person as owning stock which was owned by a non-U.S. person for purposes of determining whether a non-U.S. corporation qualifies as a controlled foreign corporation (CFC). The TCJA repealed Section 958(b)(4). While it received little attention at the time of the TCJA’s drafting amidst the broader changes made to international tax framework of the tax code, the repeal was soon seen as having significant unintended consequences in several contexts due to the resulting increase in the number of CFCs found in investment structures.

The effect of the repeal in creating more CFCs can be seen in two main scenarios:

The first, the “vertical chain,” is where a parent non-U.S. entity (Parent) owns 100% of an intermediate non-U.S. corporation (Non-U.S. Direct Sub) which in turn owns 50% or more of an underlying U.S. corporation (U.S. Indirect Sub). Under Section 318(a)(3)(C), all of Parent’s shares in Non-U.S. Direct Sub are downward attributed to U.S. Indirect Sub, such that U.S. Indirect Sub is treated as owning 100% of the shares of its parent, Non-U.S. Direct Sub, potentially causing Non-U.S. Direct Sub to be treated as a CFC despite having no actual U.S. ownership.

The second scenario, the “horizontal chain”, is where a parent non-U.S. entity (Parent) directly owns more than 50% of a non-U.S. corporation (Non-U.S. Sub) and 50% or more of a U.S. corporation (U.S. Sub). Under Section 318(a)(3)(C), all of Parent’s shares in Non-U.S. Sub are downward attributed to U.S. Sub, such that U.S. Sub is treated as owning more than 50% of the shares in Non-U.S. Sub, causing Non-U.S. Sub to become a CFC, despite, again, having no actual U.S. ownership.

Importantly, there is a 50% ownership threshold (by value) under Section 318(a)(3)(C), meaning that in each of the above scenarios, Parent must own 50% or more in value, directly or indirectly, in the U.S. entity in order for downward attribution to apply. If such threshold is met, then the U.S. entity will be treated as owning all of Parent’s shares in the non-U.S. entity.

While opinions vary, many practitioners do not treat the vertical chain scenario as resulting in Non-U.S. Direct Sub being a CFC due to Treasury Regulation 1.318-1(b)(1), which provides that an entity cannot be treated as owning its own stock because of downward attribution. Under this view, U.S. Indirect Sub cannot be treated as owning the stock of its parent, Non-U.S. Direct Sub, as this would result in U.S. Indirect Sub indirectly owning its own stock. However, there is no similar authority that would mitigate the result in the horizontal chain scenario.

The repeal of Section 958(b)(4) and resulting application of the downward attribution rules to Subpart F of the tax code has created a multitude of CFCs that did not exist prior to the TJCA, impacting new and existing investment structures in unanticipated ways. An early draft of the CARES Act would have reinstated Section 958(b)(4) and resolved these issues. This fix was removed from the legislation, however, at the request of the ranking Democratic member of the Senate Finance Committee. This may be viewed as a sign that Congress does not intend a fix or simply that this was not the right time. In any event, we are left with downward attribution in Subpart F, at least for now, and the following illustrates several ways in which this technical glitch adversely impacts customary transactions, and provides justification for Congress to act quickly to repeal or significantly limit downward attribution.

Portfolio Interest. Subject to several requirements being satisfied under Sections 871(h) and 881(c), the portfolio interest exemption exempts U.S. source interest paid to non-U.S. persons from withholding tax. This exemption is often relied upon by non-U.S. investors making investments in the U.S. through leveraged blockers. The U.S. blocker would be capitalized with a mix of debt and equity, with interest payments on the debt generating interest deductions to the blocker and being paid to its non-U.S. investors free of withholding tax. One of the requirements to qualify for the portfolio interest exemption, however, is that a non-U.S. lender cannot be a CFC that is treated as owning more than 50% of the vote or value of the borrower. Thus, in the horizontal chain scenario described above, if a foreign parent has even a single U.S. subsidiary in the structure, there is a risk that all of its non-U.S. corporate subsidiaries (other than possibly those in a vertical chain with such U.S. subsidiary) will become CFCs and will not be able to avail themselves of the portfolio interest exemption in one of the more common inbound investment structures.

Increased Number of CFCs and 10% U.S. Shareholders Subject to Additional Income Inclusion. A U.S. shareholder who owns 10% or more (measured by value or voting power) of the CFC (10% U.S. shareholder) may be required to include in gross income amounts under Sections 951 (Subpart F inclusion amount) and 951A (GILTI inclusion amount). As a result of the repeal of Section 958(b)(4), a non-U.S. corporation that otherwise would not be classified as a CFC may become a CFC if the non-U.S. shareholders of the foreign corporation hold sufficient equity interests in a U.S. corporation or U.S. partnership. Consequently, the repeal of Section 958(b)(4) has caused an increased number of CFCs and 10% U.S. shareholders required to include in gross income the Subpart F Inclusion Amount and GILTI Inclusion Amount as a result of, for example, investments made by a non-U.S. corporation’s non-U.S. shareholders.

In light of the unintended consequences resulting from the repeal of Section 958(b)(4), the Treasury Department and the Internal Revenue Service have been working on providing certain relief to taxpayers. For example, recognizing taxpayers’ limited ability to determine whether a non-U.S. corporation is a CFC and to obtain the information necessary to accurately determine the Subpart F Inclusion Amount and GILTI Inclusion Amount, the IRS issued Revenue Procedure 2019-40, which provides a safe harbor on which U.S. shareholders of certain non-U.S. corporations may rely to conclude that such corporation is not a CFC. Various requirements, however, must be satisfied for U.S. shareholders to rely on this safe harbor. Therefore, absent a reinstatement of Section 958(b)(4), non-U.S. corporations and their U.S. shareholders may continue to face uncertainties caused by the downward attribution rules and may need to carry the burden of complying with additional requirements under current or future regulatory or administrative guidance to avoid these unintended adverse consequences.

Employee Retention Tax Credit

The CARES Act also creates an employee retention tax credit for employers negatively affected by the coronavirus pandemic. Specifically, eligible employers are allowed a credit against applicable employment taxes for each calendar quarter in an amount equal to 50% of qualified wages (up to $10,000 in wages) for each employee (i.e., not more than $5,000 of credit per employee per quarter). This credit is up to an amount equal to the applicable employment taxes for the calendar quarter (reduced by any credits allowed for paid family leave or paid sick leave under the Response Act) on the wages paid for all employees during the calendar quarter. If the credit amount exceeds this limitation for any calendar quarter, the excess will be treated as an overpayment that will be refunded to the employer. Employers who receive a loan (whether or not forgiven) under the Payroll Protection Program (PPP) will not be eligible to benefit from the employee retention tax credit.

Eligible employers include any employer who: (i) carries on a trade or business during calendar year 2020, and (ii) suffers with respect to any calendar quarter in either of the following ways: (x) the operation of that trade or business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to Covid-19, or (y) gross receipts for the calendar quarter (beginning with the first calendar quarter after Dec. 31, 2019) are less than 50% of gross receipts for the same calendar quarter in the prior year (until gross receipts exceed 80% of gross receipts for the same calendar quarter in the prior year).

For employers with more than 100 full-time employees during 2019 on average, qualified wages eligible for the credit are wages paid to employees who are not providing services due to the suspension of the business or drop in gross receipts. For employers with 100 or fewer full-time employees during 2019 on average, all wages paid qualify for the credit. In neither case, regardless of employee count, will qualified wages include wages taken into account for the purposes of payroll tax credits corresponding to paid family leave or paid sick leave under the Response Act (as detailed below). Additionally, qualified wages include qualified health plan expenses incurred by the eligible employer (to the extent such amounts are excluded from the gross income of employees). The employee retention credit is effective for wages paid after March 12, 2020, and before Jan. 1, 2021.

Penalties for failing to make a tax deposit of applicable employment taxes will be waived if the Secretary of the Treasury determines that any such failure is due to a reasonable anticipation of the retention tax credit.

Employer Payroll Tax Payment Deferrals

The CARES Act permits all employers (except those employers who have loans forgiven pursuant to the PPP) to defer a share of the employer portion of social security tax payments that they would otherwise be required to pay during the tax deferral period, which begins on the date of enactment of the CARES Act and ends before Jan. 1, 2021. The deferred payroll taxes will become due as follows: (i) 50% of such taxes will be due on Dec. 31, 2021, and (ii) 50% of the applicable employer payroll taxes will become due on Dec. 31, 2022.

Clarifications Regarding Payroll Tax Credits Corresponding to the Response Act’s Paid Leave

Under the Response Act, certain covered employers must provide paid family leave and paid sick leave to certain eligible employees impacted by Covid-19. To qualify for leave, employee eligibility requirements include, but are not limited to, the following: (i) for paid family leave under the Response Act, the employee must have worked for a covered employer for at least 30 days, and (ii) for paid sick leave under the Response Act, the employee is automatically eligible regardless of tenure. Additional information on the Response Act is available here.

With regard to the offsetting employer-side payroll tax credit for paid family leave and paid sick leave, the CARES Act provides that, in anticipation of the credit, including the refundable portion, the payroll tax credit may be advanced to employers, according to forms and instructions provided by Treasury (subject to the calculations and limits as set forth in the Response Act), calculated through the end of the most recent payroll period in the quarter. Additionally, penalties for failing to make a tax deposit will be waived if Treasury determines that any such failure is due to the anticipation of payroll tax credits for required paid family leave or paid sick leave.

Small Business Loans (PPP)

Under the CARES Act, any business or nonprofit organization that employs less than 500 employees (unless the covered industry’s Small Business Administration (SBA) size standard allows more than 500 employees) is eligible to receive a covered loan under the PPP. Additionally, any business that employs 500 employees or fewer per physical location of the business and that is assigned a North American Industry Classification System (NAICS) code beginning with 72 (Accommodations and Food Services) will be eligible to receive a covered loan. A portion of these loans may be eligible for loan forgiveness under the CARES Act.

For purposes of the affiliation rules, unless one of the foregoing exceptions apply, a business that is controlled by a private equity sponsor would be deemed an affiliate of other businesses controlled by that private equity sponsor, impacting each portfolio companies’ eligibility for a loan under the PPP.

Employees of affiliated entities will be aggregated for purposes of determining the number of employees, unless (1) the business is assigned an NAICS code beginning with 72, (2) is operating as a franchise that is approved on SBA’s Franchise Directory, or (3) a business receiving financing from small business investment companies.

Small businesses should be aware that borrowing under this section of the CARES Act disqualifies a business from taking advantage of the employee retention tax credits. Additionally, if the employer’s loans are forgiven (as described below), an employer is also disqualified from deferring the employer’s share of social security taxes.

Small Business Loan Forgiveness

A small business borrower would be eligible for loan forgiveness in an amount equal to the covered costs incurred during the eight week period beginning on the date the loan originates (covered period). The loan forgiveness amount cannot exceed the principal amount of the covered loan.

Covered costs eligible for forgiveness include (a) salary, wage, commission, or similar compensation; (b) payment of cash tip or equivalent; (c) payment for vacation, parental, family, medical, or sick leave; (d) allowance for dismissal or separation; (e) payment required for the provision of health care benefits; (f) payment of retirement benefits; (g) state or local taxes on compensation; (f) payments of any compensation to or income of a sole proprietor or independent contractor (not more than $100,000 annually, prorated for the covered period); (g) mortgage interest payments; (h) rent; and (i) utilities.

Covered costs exclude (a) the compensation of an employee in excess of $100,0000 (prorated during the covered period); (b) taxes imposed or withheld under Chapters 21, 22, or 24 of the tax code (Federal Insurance Contributions Act; Railroad Retirement Tax Act; and Collection of Income Tax at Source on Wages respectively) during the covered period; (c) any compensation of an employee whose principal place of residence is outside the U.S.; (d) qualified sick leave wages for which a credit is allowed under section 7001 of the Response Act; or (e) qualified family leave wages for which a credit is allowed under section 7003 of the Response Act.

The CARES Act provides for reductions in the amount of loan forgiveness based on both (a) reductions in the number of employees in the workforce, and (b) reductions in compensation in excess of 25% for individuals making less than $100,000 annually.

However, reductions in workforce or compensation occurring during the period beginning on Feb. 15, 2020, and ending 30 days after the enactment of the CARES Act will not be considered in calculating the reduced amount of loan forgiveness, if not later than June 30, 2020, the employer has eliminated the reductions in workforce or compensation.

Economic Injury Disaster Loans

There is a current SBA loan program in which small businesses may apply for an Economic Injury Disaster Loan (EIDL). The CARES Act expands eligibility for an EIDL to businesses with 500 or fewer employees. The amount of an EIDL can be up to $2 million to help overcome the temporary loss of revenue borrowers are experiencing due to Covid-19. An EIDL may be used to pay fixed debts, accounts payable, payroll, and other bills that cannot be paid because of Covid-19.

Unlike the PPP, receiving an EIDL may still permit a borrower to apply for the employee retention tax credits available under the CARES Act.

The CARES Act provides that eligible businesses may receive an advance of up to $10,000 on an EIDL that may be used for (a) paid sick leave to employees unable to work due to Covid-19; (b) payroll for employees during business disruptions or slowdowns; (c) increased costs to obtain materials due to interrupted supply chains; (d) rent or mortgage payments; and (e) obligations that cannot be met due to revenue losses. If a business receives an advance, the business is not required to repay the advance, even if subsequently denied an EIDL loan. However, if a small business also receives a loan under the PPP, the EIDL advance will be reduced from the loan forgiveness amount under the PPP.

SIGNIFICANT CHANGES TO TAX RULES FOR INDIVIDUALS

Disaster-Relief Payments for Individuals

To put more cash in consumers’ hands, the CARES Act provides for payments of $1,200 per individual taxpayer ($2,400 for joint filers) plus $500 per qualifying child, subject to phase-out at the rate of 5% for income in excess of $75,000 ($112,500 for heads of household and $150,000 for joint filers). These payments will generally take the form of credits against tax payable or refunds of federal tax previously paid for the 2018 or 2019 tax years and are in addition to the previously announced extension of the time to file and pay 2019 individual income tax returns and taxes from April 15 to July 15. The CARES Act also allows an eligible individual to exclude from his or her 2020 income up to $5,250 in student loan repayments made by an employer, further freeing up liquidity.

Enhanced Charitable Giving Incentives

Prior to the CARES Act, individual taxpayers who itemize deductions were limited to a deduction equal to 60% of their federal adjusted gross income for cash contributions made to qualified charities. The CARES Act provides additional incentives for charitable giving and creates an attractive temporary income tax planning tool by permitting taxpayers to elect to completely suspend this limitation for cash contributions made to qualified charities during 2020. The CARES Act does not change the existing deduction limitations, however, for non-cash contributions and cash contributions to non-qualified charities such as donor-advised funds, most private non-operating foundations, and Section 509(a)(3) supporting organizations.

Corporations can similarly elect to increase their deduction limitation for such contributions from 10% to 25% of the corporation’s taxable income.

Additionally, for charitable contributions of food inventory from a taxpayer’s trade or business made during 2020, the charitable deduction limitation is increased from 15% to 25% of the taxpayer’s applicable income.

For individual taxpayers who do not itemize deductions, the CARES Act creates a new and seemingly permanent above the line deduction of up to $300 (additional to the standard deduction) for cash contributions made to qualifying charities.

States (including New York) may have their own charitable deduction limitations which operate differently.

Use of Retirement Funds

The CARES Act allows eligible retirement plan participants impacted by Covid-19 to take up to $100,000 in coronavirus-related distributions between Jan. 1, 2020, and Dec. 31, 2020, without incurring the 10% early distribution tax penalty that would otherwise apply. Such distributions may be repaid over three years and may be taxable over three years. Any such repayment would be treated as a rollover contribution to the eligible retirement plan.

The CARES Act also temporarily increases the maximum amount that an eligible participant may borrow from his or her plan account balance from $50,000 to $100,000 (and from the lesser of $10,000 or 100% (versus 50%) of the eligible participant’s vested account balance) from the enactment date and ending 180 days later. The CARES Act provides a one-year extension for repayment of a plan loan if the due date occurs between the enactment date and Dec. 31, 2020.

Additionally, the CARES Act waives required minimum distribution rules for certain retirement plans in calendar year 2020.

CONCLUSION

The CARES Act is the largest economic relief bill in modern history and will have a significant impact on companies and individuals through changes in the tax code as detailed above. The aid the CARES Act provides to various businesses and individuals is meant to assist in weathering the economic effects of Covid-19, to improve cash flow and liquidity for businesses and individuals, and to incentivize businesses to maintain their workforces and salaries.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Steven Gee, Sang I. Ji, Andrew Kreisberg, Tal Marnin, Henrik Patel, Kerry O’Rourke Perri, Victoria Rosamond, and Raymond Simon are partners at White & Case LLP in New York. Heidi Schmid is counsel in New York. Melissa Bryson, Caroline Cima, Kyle Ezzedine, Mitchell Li, and Peter Shelburne are associates in New York, and Eric Urschel is an associate in Washington. The authors would like to thank law clerk Mark Terrell for his assistance.

Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP