Change Country

COVID-19, Tax & Assurance Guidance

HEROES Act Introduced May 12: Stimulus Package Phase 4

Posted on May 13, 2020 by

Sarah Russell

Sarah Russell

Share This

As we anxiously wait for additional guidance related to the CARES Act and the Paycheck Protection Program (PPP) loan, the House is busy drafting its next round of legislation. While we are likely weeks away from enactment of the next round of stimulus (according to our Senate leaders), the House of Representatives introduced the HEROES Act on May 12. We have reviewed the summary to see what might be included once the next bill arrives. Below is a high-level summary directed at the small business community.

PPP Related Provisions

  • Clarifies that expenses paid with PPP funds that are forgiven are deductible.
  • Allows payroll tax deferral, provided for under the CARES Act, for businesses receiving loan forgiveness under the PPP. Under the CARES Act borrowers are only allowed payroll tax deferral until the loan is forgiven

New or Expanded Tax Credits

  • Introduces a payroll tax credit for qualified fixed costs, including rent, mortgage obligations, and utility payments. Such terms use the same definition as the PPP. Each quarter, qualified expenses are limited to 25% of wages, or 6.25% of gross receipts, with a maximum of $50,000. Employer size and COVID-19 impact limitations apply to this credit.
  • Extends the refundable payroll tax credit for paid sick and family leave through the end of 2021, and increases the limitation on credits for paid family leave to $12,000 (compared to $10,000 in the Family First Coronavirus Response Act (FFCRA)).
  • Provides for certain technical corrections to FFCRA.

NOL Provisions

  • Permanently suspends the limitation on excess business losses for non-corporate taxpayers. The CARES Act suspended this provision for 2018, 2019 and 2020 only.
  • The CARES Act allows a 5-year carryback for net operating losses incurred in 2018, 2019 or 2020. The HEROES Act amends this by limiting the carrybacks to tax years beginning on or after January 1, 2018. It also prohibits taxpayers with excessive executive compensation or excessive stock buybacks and dividends from carrying back losses.
  • The bill also calls for a second round of stimulus checks to be sent to American families in the same manner and for the same amount as the last round. It goes without saying that changes will be made to this proposed bill before the President signs anything. The bill is estimated at $3 trillion, and the Republican Senate has indicated they aren’t in a hurry to pass another round of stimulus as they want to “wait and see” how Phase 3 impacted the economy. Clayton & McKervey will keep you up to date as this continues.

Visit for financial information related to COVID-19.

The above represents our best understanding and interpretation of the material covered as of the date of this post. Things are moving at a rapid pace, and as such, information is subject to change. This information is provided for informational purposes only and is not intended to be a substitute for obtaining accounting, tax, or financial advice from an accountant.

Share This

Sarah Russell


As the leader of the firm's tax group, Sarah supports growth-driven domestic and international businesses with tax planning, consulting and compliance.

Related Insights

Tax & Assurance Guidance

New Corporate Transparency Act Reporting Requirements

Posted on September 30, 2022 by

Sue Tuson
Learn about the new Corporate Transparency Act reporting requirements that go into effect on January 1, 2024, including beneficial owners, company applicants, exempt entities and due dates.

Tax & Assurance Guidance

Keeping Up With Digital Taxes

Posted on September 6, 2022 by

Miroslav Georgiev
Sue Tuson
To the uninitiated, selling digital products and services can seem like a much easier business model than selling physical goods. While there may be advantages to skipping inventory and warehouse needs, the digital tax landscape can be tricky to navigate. 

Tax & Assurance Guidance

Insights from Washington: Inflation Reduction Act Signed

Posted on August 19, 2022 by

Sarah Russell
On August 7, 2022, the U.S. Senate approved the Inflation Reduction Act of 2022, a bill to finance climate and energy provisions and an extension of the enhanced Affordable Care Act (ACA) subsidies totaling $369 billion in additional spending.

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content