Coronavirus Relief Fund — Revision to Guidance Regarding When a Cost is Considered Incurred

Summary

Guidance from Treasury titled Coronavirus Relief Fund Revision to Guidance Regarding When a Cost is Considered Incurred, dated December 14, 2021. It states that the CARES Act established the $150 billion Coronavirus Relief Fund and that payments may only be used to cover costs incurred during the period that begins on March 1, 2020, and ends on December 31, 2021. Treasury revises the guidance to provide that a cost associated with a necessary expenditure incurred due to the public health emergency is considered incurred by December 31, 2021, if the recipient has incurred an obligation with respect to the cost by that date. It states that recipients are required to expend funds to cover these obligations by September 30, 2022, and revises the answers to FAQs A.54 and A.58.

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“Coronavirus Relief Fund — Revision to Guidance Regarding When a Cost is Considered Incurred.” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-the-treasury-new-crf-guidance-revision-regarding-cost-in-861d4662cf/, SHA-256 60ec7eb7af6405636ffff83061e07007566ce824506da2c7936d00c6a7ef1636.

Full text

                                 Coronavirus Relief Fund
            Revision to Guidance Regarding When a Cost is Considered Incurred
                                    December 14, 2021
The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act established the $150
billion Coronavirus Relief Fund (CRF). The CARES Act provides that payments from the CRF
may only be used to cover costs that were incurred during the period that begins on March 1,
2020, and ends on December 31, 2021 (the “covered period”).1
Treasury previously determined that, for a cost associated with the acquisition of a good or
service or the acquisition of or improvement to real estate to be considered to have been incurred
within the covered period, performance or delivery must have occurred during the covered
period.
Although Treasury has considered the CRF to be a program designed for short-term needs of
recipients to combat the virus and respond to the immediate effects of the pandemic, the public
health emergency is still in effect, and state, local, and Tribal governments continue to be on the
frontlines of the pandemic response. In addition, disruptions in supply chains have hindered
recipients’ ability to obtain and put into use goods and equipment in a timely manner. These
issues have been magnified in communities experiencing the Delta surge. Finally, given recent
litigation, many recipients have not received their allocated payments from the CRF until the last
few months.
In light of the foregoing, Treasury is now revising the guidance to provide that a cost associated
with a necessary expenditure incurred due to the public health emergency shall be considered to
have been incurred by December 31, 2021, if the recipient has incurred an obligation with
respect to such cost by December 31, 2021. Treasury defines obligation for this purpose
consistently with the Uniform Guidance definition in 2 C.F.R. 200.1 as an order placed for
property and services and entry into contracts, subawards, and similar transactions that require
payment.
Treasury’s reporting framework currently permits recipients to record their expenditures through
September 30, 2022. The CRF’s eligible use is restricted to “necessary expenditures incurred
due to” the COVID-19 public health emergency. Treasury currently expects that this
expenditure deadline will provide a sufficient amount of time for recipients to expend their funds
in accordance with the eligible uses of the CRF.
Treasury has made certain adjustments to its frequently asked questions to reflect this revision
and will provide recipients subsequent updates as to how this change will be reflected in the CRF
reporting requirements. The remainder of Treasury’s guidance remains in effect.
Consistent with Treasury’s revised interpretation above, the text of the section of Treasury’s
guidance under the heading “Costs incurred during the period that begins on March 1, 2020, and



1
 See section 601(d)(3) of the Social Security Act (42 U.S.C. 801(d)(3)), as added by section 5001 of the
CARES Act and as amended by section 1001 of Division N of the Consolidated Appropriations Act,
2021.
ends on December 31, 2021” has been revised. Treasury is also revising the answers to FAQs
A.54 and A.58 to conform the responses to this new interpretation.


More Information
Questions regarding the Coronavirus Relief Fund can be sent to
CoronavirusReliefFund@treasury.gov.
Treasury’s guidance regarding the use of funds is available here, subject to the revisions below:
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf.
Information about reporting and recordkeeping requirements related to CRF payments is
available here: https://oig.treasury.gov/cares-act.


Revisions to Guidance
The revised provisions of Treasury’s guidance are as follows:

Costs incurred during the period that begins on March 1, 2020, and ends on December 31,
2021
The CARES Act provides that payments from the Fund may only be used to cover costs that
were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021
(the “covered period”).
A cost associated with a necessary expenditure incurred due to the public health emergency is
considered to have been incurred by December 31, 2021, if the recipient has incurred an
obligation with respect to such cost by December 31, 2021. Treasury defines obligation for this
purpose as an order placed for property and services and entry into contracts, subawards, and
similar transactions that require payment. Recipients are required to expend their funds received
from the CRF to cover these obligations by September 30, 2022.

A.54 May Fund recipients upgrade critical public health infrastructure, such as providing
access to running water for individuals and families in rural and tribal areas to allow them to
maintain proper hygiene and defend themselves against the virus?
Yes, fund recipients may use payments from the Fund to upgrade public health infrastructure,
such as providing individuals and families access to running water to help reduce the further
spread of the virus. As required by the CARES Act, expenses associated with such upgrades
must be incurred by December 31, 2021. Please see the discussion of the interpretation of
“incurred” under the heading “Costs incurred during the period that begins on March 1, 2020,
and ends on December 31, 2021.”




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A.58 May payments from the Fund be used for real property acquisition and improvements
and to purchase equipment to address the COVID-19 public health emergency?

The expenses of acquiring or improving real property and of acquiring equipment (e.g., vehicles)
may be covered with payments from the Fund in certain cases. For example, Treasury’s initial
guidance referenced coverage of the costs of establishing temporary public medical facilities and
other measures to increase COVID-19 treatment capacity, including related construction costs, as
an eligible use of funds. Any such use must be consistent with the requirements of section
601(d) of the Social Security Act as added by the CARES Act.

As with all uses of payments from the Fund, the use of payments to acquire or improve property
is limited to that which is necessary due to the COVID-19 public health emergency. In the
context of acquisitions of real estate and acquisitions of equipment, this means that the
acquisition itself must be necessary. In particular, a government must (i) determine that it is not
able to meet the need arising from the public health emergency in a cost-effective manner by
leasing property or equipment or by improving property already owned and (ii) maintain
documentation to support this determination. Likewise, an improvement, such as the installation
of modifications to permit social distancing, would need to be determined to be necessary to
address the COVID-19 public health emergency.

Payments from the Fund may only be used to cover costs that were incurred during the period
that begins on March 1, 2020, and ends on December 31, 2021. Regarding this requirement,
please see the discussion of the interpretation of “incurred” under the heading “Costs incurred
during the period that begins on March 1, 2020, and ends on December 31, 2021.”

Finally, as with all costs covered with payments from the Fund, such costs must not have been
previously accounted for in the budget most recently approved as of March 27, 2020, for the
State, local, or Tribal government.




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