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

Share on facebook
Share on twitter
Share on linkedin
Share on email

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.

Sarah Russell


Sarah leads the firm’s domestic and international tax practice and is known for the practical & passionate way she advocates for clients.

Related Insights

Tax & Assurance Guidance

Foreign Tax Withholding: What You Need to Know

Posted on April 26, 2022 by

Rob Cheyne
Making service payments to a foreign person is a common cross-border transaction. U.S. taxpayers need to be aware of the applicability of withholding tax and related reporting requirements to ensure they comply and avoid unintended consequences. A U.S. payor must collect withholding tax and remit it to the IRS in the case it is applicable.

Tax & Assurance Guidance

SALT Relief for Partners and S Corps

Posted on February 23, 2022 by

Miroslav Georgiev
With small businesses supporting nearly 47% of U.S. employees, states have been advocating for pass-through entities, operating partnerships and S corporations that have been harshly impacted by the Tax Cuts and Job Act ‘s state and local taxes deduction limit. Recent legislative activity is finally providing relief for many of these businesses. 

Tax & Assurance Guidance

IRS Provides Relief on K-2 and K-3

Posted on February 17, 2022 by

Margaret Amsden
In an attempt to provide more transparency with regard to reporting of foreign activity and/or information to foreign owners, the IRS came out with two new forms: Schedule K-2 (an addendum to the Schedule K) and Schedule K-3 (an addendum to the Schedule K-1). Learn about the latest K-2 and K-3 reporting requirements issued by the IRS.

Sign up for our newsletters

Get general business and industry-specific news and knowledge straight from our accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

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

Insights & Perspectives

The Sound of Automation: Looking ahead to CSIA 2022

In this episode we talk with Lisa Richter, Director of Industry Outreach and Growth at Control System Integrators Association (CSIA) . Lisa and Bryan look ahead to the CSIA Executive conference taking place in Denver, CO on June 27-30, 2022 and share with listeners what to expect, who will be there, and the discussion panel topics focusing on this years’ theme “The Future of Work”. 

Read More

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