Congressional Research Service IN11513.5 (COVID-19 and Direct Payments to Individuals: Comparison of Recent Proposals for a Second Round of Payments)

Summary

A Congressional Research Service Insight, IN11513 (version 5), updated October 20, 2020, comparing proposals for a second round of direct payments to individuals. It recalls that the CARES Act (P.L. 116-136), signed March 27, 2020, provided $1,200 per eligible individual ($2,400 for most married couples) plus $500 per eligible child. It lists the proposals compared: the Heroes Act (H.R. 6800), which passed the House on May 15, 2020; the American Workers, Families, and Employers Assistance Act (S. 4318), introduced July 27, 2020; and the revised Heroes Act (H.R. 8406), introduced September 29, 2020 and passed by the House on October 1, 2020 as an amendment to H.R. 925.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

INSIGHTi

COVID-19 and Direct Payments to
Individuals: Comparison of Recent Proposals
for a Second Round of Payments

Updated October 20, 2020
The CARES Act (P.L. 116-136), signed into law on March 27, 2020, included direct payments to
individuals. These payments, most of which have already been issued, were equal to $1,200 per eligible
individual ($2,400 for most married couples), with an additional $500 per eligible child. The payments
phase down for higher-income households. (For more information on the CARES Act payments, see the
CRS resource guide.)
The following subsequent legislative proposals would provide a second round of payments
 the Heroes Act (H.R. 6800), which passed the House on May 15, 2020;
 the American Workers, Families, and Employers Assistance Act (S. 4318), which was
introduced in the Senate on July 27, 2020 (S. 4318 is one component of what has been
referred to as the HEALS Act); and
 the “revised version” of the Heroes Act (H.R. 8406), introduced on September 29, 2020.
The House passed the revised version of the Heroes Act on October 1, 2020, as a House
amendment to the Senate amendment to H.R. 925.
Table 1 provides a summary of the major provisions of these proposed second rounds of payments.
Although these proposals differ, there are several major similarities. First, as with the CARES Act
payments, all the proposals for a second round of payments nominally structure them as a new one-time
refundable tax credit for 2020 that would be automatically issued this year, as opposed to 2021 (when
taxpayers will file their 2020 income tax returns). The IRS would determine payment amounts based on
2019 tax return data, or if unavailable, 2018 income tax return data. Second, 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. Third, as with
any tax credit, these payments would not count as income or resources for a 12-month period in
determining eligibility for, or the amount of assistance provided by, any federally funded public benefit
program. Finally, these payments would not be taxable.

Congressional Research Service
https://crsreports.congress.gov
IN11513

CRS INSIGHT
Prepared for Members and
Committees of Congress
Congressional Research Service 2

Table 1. Major Provisions of Direct Payments in Recent Legislative Proposals
First Round of Proposed Second Round of Direct Payments
Payments in the
CARES Act Heroes Act HEALS “Revised” Heroes Act
(P.L. 116-136) (H.R. 6800) (S. 4318) (H.R. 8406)

Payment $1,200 payments for Same as CARES Act Same as CARES Act Same as CARES Act
amount eligible individuals
($2,400 for married
joint filers).

Additional $500 for Additional $1,200 for each Additional $500 for each Additional $500 for each
each dependent child dependent, including older dependent, including older dependent, including older
under 17 years old (as children and adult children and adult children and adult
defined for the child dependents, up to a dependents. dependents.
credit). maximum of three
dependents.
Phaseout Total payment amount Same as CARES Act Same as CARES Act Same as CARES Act
phases out by 5% of
adjusted gross income
over thresholds:
$75,000 singles
$112,500 heads of
households
$150,000 married joint
filers
Eligibility Everyone except: Same as CARES Act Everyone except: Same as CARES Act
 Nonresident  Nonresident aliens
aliens  Dependents of other
 Dependents of taxpayers
other 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 Dependents eligible for Dependents eligible for Dependents eligible for
$500 amount are $1,200 payment are those $500 amount are those $500 payment are those
those defined under defined for the dependent defined for the dependent defined for the dependent
IRC §24(c) for the exemption. In other words, exemption. In other words, exemption. In other words,
child tax credit. all qualifying children and all qualifying children and all qualifying children and
qualifying relatives. qualifying relatives. qualifying relatives.
Congressional Research Service 3

First Round of Proposed Second Round of Direct Payments
Payments in the
CARES Act Heroes Act HEALS “Revised” Heroes Act
(P.L. 116-136) (H.R. 6800) (S. 4318) (H.R. 8406)

ID All eligible individuals All eligible individuals and Same as CARES Act All eligible individuals and
requirement and qualifying children qualifying children must qualifying children must
must have a work- have a SSN or ITIN for the have a SSN or ITIN for the
authorized Social household to receive the household to receive the
Security Number payment.b payment.b
(SSN) for the
household to receive a
payment.b

Households in which
at least one otherwise
eligible individual does
not have an SSN—and
instead uses an
Individual Taxpayer
Identification Number
(ITIN)—are ineligible
for the payments.
(Exception for certain
married members of
the Armed Forces.)

ITINs are issued by the
Internal Revenue
Service (IRS) to
taxpayers who are not
eligible for a SSN so
that they can comply
with federal tax law.
ITIN users include
many noncitizens who
are unlawfully present
or unauthorized to
work in the United
States.
Offset and The CARES Act Same as CARES Act, except Same as CARES Act Same as CARES Act, except
Reduction for payments cannot be these payments cannot be these payments cannot be
Past-Due offset (reduced before offset for child support offset for child support
Debts being issued) to satisfy debt. debt.
certain debts owed to
governmental agencies,
such as tax debts or
unemployment
compensation debts.
These payments can be
offset for child support
debt.
Congressional Research Service 4

First Round of Proposed Second Round of Direct Payments
Payments in the
CARES Act Heroes Act HEALS “Revised” Heroes Act
(P.L. 116-136) (H.R. 6800) (S. 4318) (H.R. 8406)

In addition, these payments In addition, these payments In addition, these payments
would, with certain would be generally exempt would be generally exempt
exceptions, be exempt from from debt collection from debt collection
debt collection actions, such actions, such as garnishment actions, such as garnishment
as garnishment or levy, that or levy, that occur once or levy, that occur once
occur once payment are in payments are in accounts payments are in accounts
accounts (i.e., after (i.e., after payments are (i.e., after payments are
payments are issued). issued). issued).

Modifications NA Yes Yes No
to CARES Act
payments
Budgetary $292.4 billion $412.5 billion NA $306.9 billion
Cost FY2020-FY2030 FY2020-FY2030 FY2021-FY2030

Sources: CRS analysis of H.R. 8406, as introduced September 29, 2020; S. 4318, as introduced on July 27, 2020; the
Heroes Act (H.R. 6800), as passed by House on May 15, 2020; the CARES Act (P.L. 116-136); and the Joint Committee on
Taxation, JCX-11R-20, JCX-16-20, JCX-21-20.
Notes: Estates and trusts are ineligible to receive the CARES Act payments, and would also be ineligible under the three
proposals. Under all three proposals, the payments would be extended to the U.S. territories in a manner similar to
CARES Act payments. Budgetary cost estimates are the costs for a second round of payments only, and do not include
the cost of modifying the CARES Act payments, if applicable.
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.
b. Adoption taxpayer IDs (ATINs) could also be used for adopted children.

Author Information

Margot L. Crandall-Hollick
Acting Section Research Manager

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
Congressional Research Service 5

as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

IN11513 · VERSION 5 · UPDATED

File and source

File: IN11513.5.pdf
Size: 771,768 bytes
SHA-256: 7a247ead41ff5d2493cf45aded4c00e508eaa9111254a23dbe6640e044dcee6e
Our copy: IN11513.5.pdf
Original: crsreports.congress.gov