Congressional Research Service IN11473.1 (COVID-19: Summary of Direct Payments in the American Workers, Families, and Employers Assistance Act (S. 4318))
Summary
CRS Insight IN11473.1, COVID-19: Summary of Direct Payments in the July 27 Senate Proposal, dated July 28, 2020. It summarizes the second round of direct payments in draft bill text circulated by the Senate Finance Committee on July 27, 2020, the American Workers, Families, and Employers Assistance Act, and compares them with the CARES Act (P.L. 116-136) payments and the Heroes Act (H.R. 6800). The proposed payments would equal $1,200 per eligible individual ($2,400 for joint filers) plus $500 per eligible dependent, phased down for higher-income taxpayers. Unlike the CARES Act payments, the $500 would apply to dependents of all ages, a group the Insight says includes an estimated 20.4 million dependents 17 years old and older.
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INSIGHTi
COVID-19: Summary of Direct Payments in
the July 27 Senate Proposal
July 28, 2020
A draft bill text circulated by the Senate Finance Committee on July 27, 2020, includes a second round of
direct payments to help alleviate the economic effects associated with the Coronavirus Disease 2019
(COVID-19) pandemic. (The text is entitled the American Workers, Families, and Employers Assistance
Act.) The text also includes modifications to the first round of direct payments enacted in the
Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). This Insight provides a
brief overview of the proposed second round of payments, as well as a comparison to the enacted CARES
Act payments and those proposed in the Heroes Act (H.R. 6800).
Direct Payments
The proposed second round of direct payments would equal $1,200 per eligible individual ($2,400 for
married individuals filing a joint tax return), plus an additional $500 per eligible dependent, phased down
for higher-income taxpayers. In contrast to the CARES Act payments, which were effectively limited to
dependents under age 17, eligible individuals could receive the $500 amount for all dependents. This
more expansive definition includes an estimated 20.4 million dependents who are 17 years old and
older—including older children, students, and adult dependents.
Like the CARES Act payments, these payments would be nominally structured as a new one-time
refundable tax credit for 2020 that would be automatically advanced so that payments would be received
this year, as opposed to 2021 (when 2020 income tax returns will be filed). Hence, the Internal Revenue
Service (IRS) would generally issue these payments automatically in 2020 based on 2019 tax return data,
or if unavailable, 2018 income tax return data.
As with the CARES Act payments, recipients of Social Security, Supplemental Security Income (SSI),
Railroad Retirement, or certain VA benefits who have not filed a recent federal income tax return would
be eligible to receive these payments automatically. Unlike the CARES Act, the bill would also direct the
IRS to automatically issue payments to all eligible nonfilers who received benefits from these programs
prior to this bill’s enactment, not just to those who received benefits in 2019. In addition, the bill would
expressly authorize the issuance of payments to representative payees or fiduciaries on behalf of eligible
program recipients, as well as clarify that the payments are only for the benefit of suc h recipients.
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Other major differences between these payments and the CARES Act payments are summarized in Table
1 and include the following:
Deceased individuals: Individuals who died before January 1, 2020, would be ineligible
for these payments. This provision would apply to the CARES Act payments.
Prisoners: Certain individuals who are incarcerated (as defined under 42 U.S.C.
402(x)(1)(A)) at the time the payment is processed would be ineligible for these
payments in 2020. This provision would apply to the CARES Act payments.
Garnishment or levy for past-due debts: These payments would be generally be
protected from certain debt collection actions by certain creditors (such as certain
garnishments or levies), including private creditors. These types of actions generally
occur after payments have been issued. These protections would also apply to certain
CARES Act payments.
Table 1. Major Provisions of Direct Payments in the July 27 Proposal
Compared to CARES Act Payments and Proposed Heroes Act Payments
Proposed Heroes Act
July 27th Proposal CARES Act Payments Payments
Payment Same as CARES Act $1,200 payments for eligible Same as CARES Act
amount individuals ($2,400 for married
joint filers).
Additional $1,200 for each
Additional $500 for each Additional $500 for each
dependent (all qualifying children
dependent (all qualifying children dependent child under 17 years
and qualifying relatives).
and qualifying relatives). old (as defined for the child
credit).
Phaseout Same as CARES Act Total amount phases out by 5% Same as CARES Act
of adjusted gross income over
thresholds:
$75,000 singles
$112,500 head of households
$150,000 married joint filers
Eligibility Everyone except: Everyone except: Same as CARES Act
Nonresident aliens Nonresident aliens
Dependents of other Dependents of other
taxpayers taxpayers
Individuals who died before
January 1, 2020
Incarcerated individuals as
defined under 42 U.S.C.
402(x)(1)(A) a
Dependents eligible for $500 Dependents eligible for $500 Dependents eligible for $500
amount are those defined for the amount are those defined under payment are those defined for
dependent exemption. IRC §24(c) for the child tax the dependent exemption.
credit.
Ineligibility for deceased and
incarcerated individuals would
also apply to the CARES Act
payments.
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Proposed Heroes Act
July 27th Proposal CARES Act Payments Payments
ID Same as CARES Act All eligible individuals and All eligible individuals and
requirement qualifying children must have a qualifying children must have a
work-authorized Social Security SSN or ITIN for the household
Number (SSN) for the household to receive the payment.
to receive a payment.
Households in which at least one ITINs are issued by the Internal
otherwise eligible individual does Revenue Service (IRS) to
not have an SSN—and instead taxpayers who are not eligible for
uses an Individual Taxpayer an SSN so that they can comply
Identification Number (ITIN)— with federal tax law. ITIN users
are ineligible for the payments. include many noncitizens who are
(Exception for certain married unlawfully present or
members of the Armed Forces.) unauthorized to work in the
United States.
Adoption taxpayer IDs (ATINs) Adoption taxpayer IDs (ATINs)
may also be used for adopted could also be used for adopted
children. children.
Offset and Same as CARES Act The CARES Act payments cannot Same as CARES Act, except
Reduction for be offset (reduced before being these payments cannot be offset
Past-Due issued) to satisfy certain debts for child support debt.
Debts In addition, these payments owed to governmental agencies,
would be generally exempt from such as tax debts or
debt collection actions, such as unemployment compensation In addition, these payments
garnishment or levy, that occur debts. would generally be exempt from
once payments are in accounts debt collection actions, such as
(i.e., after payments are issued). These payments can be offset for garnishment or levy, that occur
child support debt. once payment are in accounts
This garnishment/levy provision
would also apply to certain (i.e., after payments are issued).
CARES Act payments.
Sources: CRS Analysis of the July 27 draft text, the HEROESs Act (H.R. 6800) and the CARES Act (P.L. 116-136).
Notes: Estates and trusts are ineligible to receive the CARES Act payments, and would also be ineligible under the
HEROES Act and the July 27 proposal. The proposed payments would be extended to the territories in a manner similar
to CARES Act payments. In addition, like the CARES Act, the proposed legislation includes a public awareness campaign
and additional appropriations to Treasury and the Social Security Administration to administer these payments.
a. These individuals would also be ineligible to receive these payments as a tax credit claimed on their 2020 income tax
returns if they were considered incarcerated (as defined under 42 U.S.C. 402(x)(1)(A)) for all of 2020.
Author Information
Margot L. Crandall-Hollick
Acting Section Research Manager
Congressional Research Service 4
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