This information is provided by NAHB, use the link below to view more resources https://www.nahb.org/Advocacy/Industry-Issues/Emergency-Preparedness-and-Response/Coronavirus-Preparedness Net Operating Loss (NOL) Modifications: For income tax purposes, NOLs arise when allowable deductions of a business exceed their taxable income. Under current law, businesses can carry forward NOLs indefinitely to offset against future taxable income, but losses may not exceed 80% of taxable income in any tax period. NOLs may no longer be carried back and used to offset tax liability in prior years. • Under the CARES Act, losses from 2018, 2019 and 2020 may be carried back five years from the year in which the loss was incurred. • This will allow businesses with NOLs to amend prior year tax returns and obtain refunds to provide additional liquidity. • The bill also repeals the 80% of income limitation so that NOLs from 2018, 2019 and 2020 may be carried forward to fully offset taxable income in years after the loss. Modifications on Limitation of Business Interest: For businesses subject to the 30% of income limitation on deducting business interest expenses, the CARES Act increases the limit to 50% for 2019 and 2020. For more information on the tax component of the CARES Act, contact J.P Delmore at NAHB at 1-800-368-5242 x8412 or David Logan at x8448. Banking The CARES Act will provide small community banks with several targeted regulatory relief measures aimed at ensuring that these critical lending institutions for the residential home construction industry continue to keep credit flowing during the COVID-19 crisis. The legislation will: • Allow the Federal Deposit Insurance Corporation to fully guarantee business transaction accounts and provide banks with additional flexibility and streamlined capital requirements to ensure liquidity during the crisis. • Permit banks to postpone compliance with the Current Expected Credit Losses (CECL) standard, which requires lenders to immediately account for potential losses when they issue loans, potentially tying up much-needed capital. • Encourage all financial institutions to work with borrowers to modify or restructure existing loans, including forbearance arrangements, interest rate modifications, repayment plans and any other similar arrangements that defer or delay the payment of principal or interest before borrowers are experiencing payment difficulties. The bill would suspend accounting rules so such modifications would not be categorized as troubled debt restructurings. Single Family Mortgage Relief: • The CARES Act will permit anyone with a loan backed by Fannie Mae, Freddie Mac, FHA, VA or Rural Housing to receive forbearance up to one year on their mortgage by calling their servicer and reporting that they have a COVID-19 related financial hardship. • The legislation also temporarily bars foreclosures on government-backed mortgages for not less than 60 days beginning March 18, 2020. • Finally, the CARES Act gives credit scoring relief to those impacted by the COVID-19 crisis, including those taking advantage of government forbearance programs. For more information in the banking provisions in the CARES Act, contact Scott Meyer at NAHB at 1-800-368-5242 x8144 or Jessica Lynch at x8401. Unemployment Provisions The CARES Act contains a significant expansion of unemployment benefits to support workers who have lost their jobs as a result of the COVID-19 health pandemic. Specifically, the measure: • Creates a temporary Pandemic Unemployment Assistance (PUA) program to provide payment to those not traditionally eligible for unemployment benefits — such as the selfemployed and independent contractors — who are unable to work as a direct result of the coronavirus pandemic. Payments through the PUA program are authorized for a maximum of 39 weeks, ending Dec. 31, 2020. This will be a huge economic relief to a large segment of NAHB’s membership. • Extends traditional unemployment insurance (UI) benefits for another 13 weeks and provides for an additional $600 per week for each recipient of traditional UI or PUA for up to four months. • Authorizes federal funds to cover the usual one-week waiting period before an individual gets their first unemployment benefits so that they can start receiving payments immediately. • Funds short-term compensation (STC) programs and allows states to create new programs for employers that are having to choose between laying off or furloughing their employees to receive funding to keep those workers on their payroll. The STC program funding will be available for coverage of weeks of unemployment through December 31, 2020. Temporary, seasonal or intermittent workers are not eligible for those types of benefits. • Authorizes payments to states to reimburse government agencies, tribes and nonprofits for half the payments they are required to make into the state unemployment fund. Paid Leave The CARES Act includes some limiting language on the paid leave provisions in the second coronavirus bill. These include an explicit limitation on the weekly and total amounts that can be paid to a worker for sick leave and family leave related to the COVID-19 health pandemic. Further, the bill extends access to paid family and medical leave for an employee who was laid off by an employer March 1, 2020, or later in certain instances if they are rehired by that employer. To be eligible, an employee would have had to work for the employer at least 30 days prior to being laid off. The legislation also allows employers to receive an advance tax credit from Treasury for providing paid leave benefits instead of waiting to be reimbursed on the back-end. This will require a rulemaking or guidance to establish a process for how these advance tax credits can be issued to employers. For more information on the unemployment and paid leave provisions in the CARES Act, contact Alexis Moch at NAHB at 1-800-368-5242 x8407. Page 5

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