Paycheck Security Act

II 116TH CONGRESS 2D SESSION S. 3793 To amend the CARES Act to modify the employee retention tax credit to secure the paychecks and benefits of workers, to provide a refundable credit against payroll taxes for the operating costs of employers, to amend the Internal Revenue Code of 1986 to provide a small business rebate, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 21, 2020 Mr. WARNER (for himself, Mr. SANDERS, Mr. JONES, Mr. BLUMENTHAL, Ms. KLOBUCHAR, Ms. WARREN, Mrs. FEINSTEIN, Mr. REED, and Mr. MERKLEY) introduced the following bill; which was read twice and re- ferred to the Committee on Finance A BILL To amend the CARES Act to modify the employee retention tax credit to secure the paychecks and benefits of work- ers, to provide a refundable credit against payroll taxes for the operating costs of employers, to amend the Inter- nal Revenue Code of 1986 to provide a small business rebate, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE, ETC. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Paycheck Security Act’’. 5 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 3793 IS (b) TABLE OF CONTENTS.—The table of contents of 1 this Act is as follows: 2 Sec. 1. Short title, etc. TITLE I—EMPLOYER CREDITS Sec. 101. Paycheck security credit. Sec. 102. Credit for employer operating expenses. Sec. 103. Advance payments of credits. Sec. 104. Administration. Sec. 105. Public disclosure. Sec. 106. Employee notification. TITLE II—SMALL BUSINESS REBATE Sec. 201. Small business rebate. TITLE III—OTHER PROVISIONS Sec. 301. Additional appropriations for Department of Treasury. Sec. 302. GAO report. TITLE I—EMPLOYER CREDITS 3 SEC. 101. PAYCHECK SECURITY CREDIT. 4 (a) AMOUNT OF CREDIT.—Section 2301(a) of the 5 CARES Act is amended— 6 (1) by striking ‘‘In the case of’’ and inserting 7 the following: 8 ‘‘(1) ALLOWANCE OF CREDIT.—In the case of’’, 9 (2) by striking ‘‘an amount equal to 50 per- 10 cent’’ and inserting ‘‘an amount equal to the sum 11 of— 12 ‘‘(A) 100 percent’’, 13 (3) by striking the period at the end and insert- 14 ing ‘‘, plus 15 ‘‘(B) in the case of an eligible employer for 16 which the average number of full-time employ- 17 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 3793 IS ees (within the meaning of section 4980H of 1 the Internal Revenue Code of 1986) employed 2 by such eligible employer during 2019 was not 3 greater than 100, 50 percent of all other wages 4 with respect to each employee of such employer 5 for the calendar quarter.’’, and 6 (4) by adding at the end the following new 7 paragraph: 8 ‘‘(2) PHASEOUT.—In the case of an eligible em- 9 ployer for which the gross receipts for the calendar 10 quarter exceed 80 percent of gross receipts for the 11 same calendar quarter in the prior year, the amount 12 of credit allowed under paragraph (1) (determined 13 without regard to this paragraph) shall be reduced 14 (but not below zero) by an amount that bears the 15 same ratio to such amount of credit as— 16 ‘‘(A) the excess of— 17 ‘‘(i) 85 percent, over 18 ‘‘(ii) the percentage by which the tax- 19 payer’s gross receipts for the calendar 20 quarter exceed the taxpayer’s gross re- 21 ceipts for the same calendar quarter in the 22 prior year, bears to 23 ‘‘(B) 5 percent.’’. 24 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 3793 IS (b) MODIFICATION OF LIMITATION.—Section 1 2301(b)(1) of the CARES Act is amended by striking ‘‘for 2 all calendar quarters shall not exceed $10,000’’ and insert- 3 ing ‘‘shall not exceed— 4 ‘‘(A) $22,500 for any calendar quarter, or 5 ‘‘(B) $90,000 for all calendar quarters.’’. 6 (c) DEFINITION OF ELIGIBLE EMPLOYER.—Section 7 2301(c)(2) of the CARES Act is amended to read as fol- 8 lows: 9 ‘‘(2) ELIGIBLE EMPLOYER.— 10 ‘‘(A) IN GENERAL.—The term ‘eligible em- 11 ployer’ means any employer— 12 ‘‘(i) which was carrying on a trade or 13 business during calendar year 2020, 14 ‘‘(ii) which meets the requirements of 15 subparagraph (B), 16 ‘‘(iii) with respect to any calendar 17 quarter, for which the gross receipts (with- 18 in the meaning of section 448(c) of the In- 19 ternal Revenue Code of 1986) for the cal- 20 endar quarter are less than 85 percent of 21 gross receipts for the same calendar quar- 22 ter in the prior year. 23 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 3793 IS ‘‘(B) REQUIREMENTS.—An employer 1 meets the requirements of this subparagraph if 2 such employer— 3 ‘‘(i) did not have gross receipts for the 4 last taxable year ending in 2019 of more 5 than $1,000,000,000, and 6 ‘‘(ii) did not have on hand on March 7 1, 2020, cash and cash equivalents of more 8 than an amount equal to 150 percent of 9 the wages paid by the employer during cal- 10 endar year 2019. 11 ‘‘(C) TAX-EXEMPT ORGANIZATIONS.—In 12 the case of an organization which is described 13 in section 501(c) of the Internal Revenue Code 14 of 1986 and exempt from tax under section 15 501(a) of such Code— 16 ‘‘(i) subparagraph (A)(i) shall apply 17 to all operations of such organization, and 18 ‘‘(ii) any reference in this section to 19 gross receipts shall be treated as a ref- 20 erence to gross receipts within the meaning 21 of section 6033 of such Code. 22 ‘‘(D) EXCEPTIONS.—The term ‘eligible 23 employer’ shall not include— 24 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 3793 IS ‘‘(i) any employer that is a debtor in 1 a case under chapter 7 of title 11, United 2 States Code, during the calendar quarter, 3 or 4 ‘‘(ii) any covered entity (as defined in 5 section 4019).’’. 6 (d) DETERMINATION OF QUALIFIED WAGES.— 7 (1) IN GENERAL.—Section 2301(c)(3) of the 8 CARES Act is amended to read as follows: 9 ‘‘(3) QUALIFIED WAGES.— 10 ‘‘(A) IN GENERAL.—The term ‘qualified 11 wages’ means wages paid with respect to any 12 period during the calendar quarter in which an 13 employee is not providing services. Such term 14 shall not include any wages taken into account 15 under section 7001 or section 7003 of the Fam- 16 ilies First Coronavirus Response Act. 17 ‘‘(B) LIMITATION.—Qualified wages paid 18 or incurred by an eligible employer with respect 19 to an employee for any period described in sub- 20 paragraph (A) may not exceed the greater of— 21 ‘‘(i) $600 per week, or 22 ‘‘(ii) the amount such employee would 23 have been paid (including tips which would 24 have been deemed to be paid by the em- 25 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 3793 IS ployer under section 3121(q)) for working 1 an equivalent duration during the 30 days 2 immediately preceding such period.’’. 3 (2) HEALTH PLAN EXPENSES.—Section 4 2301(c)(5) of such Act is amended to read as fol- 5 lows: 6 ‘‘(5) WAGES.— 7 ‘‘(A) IN GENERAL.—The term ‘wages’ 8 means wages (as defined in section 3121(a) of 9 the Internal Revenue Code of 1986) and com- 10 pensation (as defined in section 3231(e) of such 11 Code). 12 ‘‘(B) ALLOWANCE FOR CERTAIN HEALTH 13 PLAN EXPENSES.— 14 ‘‘(i) IN GENERAL.—Such term shall 15 include amounts paid or incurred by the el- 16 igible employer to provide and maintain a 17 group health plan (as defined in section 18 5000(b)(1) of the Internal Revenue Code 19 of 1986), but only to the extent that such 20 amounts are excluded from the gross in- 21 come of employees by reason of section 22 106(a) of such Code. 23 ‘‘(ii) ALLOCATION RULES.—For pur- 24 poses of this section, amounts treated as 25 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 3793 IS wages under clause (i) shall be treated as 1 paid with respect to any employee (and 2 with respect to any period) to the extent 3 that such amounts are properly allocable to 4 such employee (and to such period) in such 5 manner as the Secretary may prescribe. 6 Except as otherwise provided by the Sec- 7 retary, such allocation shall be treated as 8 properly made if made on the basis of 9 being pro rata among periods of cov- 10 erage.’’. 11 (e) CERTAIN GOVERNMENTAL EMPLOYEES ELIGIBLE 12 FOR CREDIT.— 13 (1) IN GENERAL.—Section 2301(f) of the 14 CARES Act is amended to read as follows: 15 ‘‘(f) CERTAIN GOVERNMENTAL EMPLOYERS.— 16 ‘‘(1) IN GENERAL.—The credit under this sec- 17 tion shall not be allowed to the Federal Government 18 or any agency or instrumentality thereof. 19 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 20 apply to any organization described in section 21 501(c)(1) of the Internal Revenue Code of 1986 and 22 exempt from tax under section 501(a) of such Code. 23 ‘‘(3) SPECIAL RULES.—In the case of any State 24 government, Indian tribal government, or any agen- 25 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 3793 IS cy, instrumentality, or political subdivision of the 1 foregoing— 2 ‘‘(A) clauses (i) of subsection (c)(2)(A) 3 shall apply to all operations of such entity, and 4 ‘‘(B) clauses (ii) and (iii) of subsection 5 (c)(2)(A) shall not apply.’’. 6 (2) COORDINATION WITH APPLICATION OF CER- 7 TAIN DEFINITIONS.— 8 (A) IN GENERAL.—Section 2301(c)(5)(A) 9 of the CARES Act, as amended by the pre- 10 ceding provisions of this Act, is amended by 11 adding at the end the following: ‘‘For purposes 12 of the preceding sentence (other than for pur- 13 poses of subsection (b)(2)), wages as defined in 14 section 3121(a) of the Internal Revenue Code 15 of 1986 shall be determined without regard to 16 paragraphs (1), (5), (6), (7), (8), (10), (13), 17 (18), (19), and (22) of section 3212(b) of such 18 Code (except with respect to services performed 19 in a penal institution by an inmate thereof).’’. 20 (B) CONFORMING AMENDMENTS.—Sec- 21 tions 2301(c)(6) of the CARES Act is amended 22 by striking ‘‘Any term’’ and inserting ‘‘Except 23 as otherwise provided in this section, any 24 term’’. 25 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 3793 IS (f) COORDINATION WITH PAYCHECK PROTECTION 1 PROGRAM.— 2 (1) AMENDMENT TO PAYCHECK PROTECTION 3 PROGRAM.—Section 1106(a)(8) of the Cares Act is 4 amended by inserting ‘‘, except that such costs shall 5 not include qualified wages taken into account in de- 6 termining the credit allowed under section 2301 of 7 this Act’’ before the period at the end. 8 (2) AMENDMENTS TO EMPLOYEE RETENTION 9 TAX CREDIT.— 10 (A) IN GENERAL.—Section 2301(g) of the 11 CARES Act is amended to read as follows: 12 ‘‘(g) ELECTION TO NOT TAKE CERTAIN WAGES 13 INTO ACCOUNT.— 14 ‘‘(1) IN GENERAL.—This section shall not apply 15 to qualified wages paid by an eligible employer with 16 respect to which such employer makes an election 17 (at such time and in such manner as the Secretary 18 may prescribe) to have this section not apply to such 19 wages. 20 ‘‘(2) COORDINATION WITH PAYCHECK PROTEC- 21 TION PROGRAM.—The Secretary, in consultation 22 with the Administrator of the Small Business Ad- 23 ministration, shall issue guidance providing that 24 payroll costs paid or incurred during the covered pe- 25 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 3793 IS riod shall not fail to be treated as qualified wages 1 under this section by reason of an election under 2 paragraph (1) to the extent that a covered loan of 3 the eligible employer is not forgiven by reason of a 4 decision under section 1106(g). Terms used in the 5 preceding sentence which are also used in section 6 1106 shall have the same meaning as when used in 7 such section.’’. 8 (B) CONFORMING AMENDMENT.—Section 9 2301 of the CARES Act is amended by striking 10 subsection (j). 11 (g) DENIAL OF DOUBLE BENEFIT.—Section 2301(h) 12 of the CARES Act is amended— 13 (1) by striking paragraphs (1) and (2) and in- 14 serting the following: 15 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—Any 16 wages taken into account in determining the credit 17 allowed under this section shall not be taken into ac- 18 count as wages for purposes of sections 45A, 45B, 19 45P, 45S, 51, and 1396 of the Internal Revenue 20 Code of 1986.’’, and 21 (2) by redesignating paragraph (3) as para- 22 graph (2). 23 (h) RECAPTURE AND ADVANCEMENT OF CREDIT.— 24 Section 2301 of the CARES Act is amended by redesig- 25 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 3793 IS nating subsections (l) and (m) as subsections (o) and (p), 1 respectively, and by inserting after subsection (k) the fol- 2 lowing: 3 ‘‘(l) RECAPTURE.— 4 ‘‘(1) IN GENERAL.—In any case in which an eli- 5 gible employer which has been allowed a credit 6 under this section for any calendar quarter takes 7 any action described in paragraph (2) during the 1- 8 year period beginning on the day after the end of 9 such calendar quarter, the tax imposed by chapter 10 21 or 22 of the Internal Revenue Code of 1986 11 (whichever is applicable) for the calendar quarter in 12 which such action occurs shall be increased by the 13 amount of the credit so allowed. 14 ‘‘(2) ACTIONS DESCRIBED.—The following ac- 15 tions are described in this paragraph: 16 ‘‘(A) RETURNS OF CAPITAL.—The eligible 17 employer purchases its own stock or otherwise 18 distributes capital (including through a divi- 19 dend). 20 ‘‘(B) LABOR NEGOTIATIONS.—The eligible 21 employer— 22 ‘‘(i) abrogates a collective bargaining 23 agreement, or 24 VerDate Sep 11 2014 09:18 Jun 14, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S3793.IS S3793 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 3793 IS ‘‘(ii) does not remain neutral in any 1 union organizing effort. 2 ‘‘(C) PAYROLL.—The eligible employer 3 pays any officer or employee a salary in an 4 amount that is greater than 50 times the me- 5 dian salary of employees during the period last- 6 ing one year after the end of the calendar quar- 7 [Text truncated for display. 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