President Trump’s Executive Orders for Pandemic Relief

After Congress ended the week by not agreeing to the CARES 2 Stimulus package that has been argued about for the last month, President Trump decided to execute several executive orders in order to help Americans during the Pandemic. This action has caused some confusion for everyone. The following information should help clarify exactly what these orders are. 

The Executive Orders

On August 8, President Trump signed four executive orders to extend federal pandemic relief. The executive orders include the following:

· A payroll tax deferral of 6.2% of Social Security taxes on wages for employees who earn less than $100,000 per year from September 1 to December 31, 2020. Note: This is currently a deferral, not a tax credit. It is unclear whether the taxpayer (employee) or the employer will eventually be required to pay the full amount. 

This payroll tax deferral is something President Trump had been trying to get Congress to pass for some time to no avail. One of the biggest issues with this order is that somebody is going to have to pay back the deferral and with so many jobs in jeopardy, it may be a temporary fix; however, unless you speak with a tax professional, it would be ill-advised to actually spend any of that money.

Employers and employed workers will be particularly interested in understanding how the payroll tax deferral will work. The intent is to put more money in workers’ pockets by increasing their take-home pay.  At this point, it’s understood the taxes will be deferred to be paid at a later date. However, the order directs the Secretary of Treasury to explore ways to eliminate this tax obligation altogether.

· The federal unemployment benefits have been extended beyond the original July 31 expiration date but they are now reduced to $400 per week for qualified persons through mid-December 2020. This includes a contingency that  states contribute at least 25% ($100) of these funds. We don’t know yet when this will go into effect, whether it will be retroactive to August 1, or which states will participate.

While President Trump is throwing a bone to those still unemployed, there is more confusion now that he is insisting the states pick up 25% of the tab. Even more problematic is that many states, such as California, say they won’t pick up that quarter of the tab for their residents. This leaves the unemployed Californians wondering if they will only get $300/week or if their state won’t comply, will that mean they get nothing? There need to be more answers for the unemployed. Each state will need to confirm whether or not they can afford to participate. 

· All federal student loan payment deferrals (including waivers of interest) have been extended through December 31, 2020.

This is the most straightforward of the orders. If you have a federal student loan, you can breathe a bit easier until January 2021. 

· The Treasury and Housing and Urban Development departments have been asked to identify temporary financial assistance measures to help renters and homeowners avoid eviction or foreclosure. This study does not extend the federal ban on evictions, which expired on July 31, 2020.

While this initially sounded like perhaps the moratorium would be extended, this particular order functions more like a gesture of acknowledgment that people are still in trouble and losing their homes. Unfortunately, many landlords do not care about helping renters avoid evictions and not every bank wants to avoid foreclosures, especially when the housing market seems to be the only thing flourishing in this economy.  

The bottom line: legal challenges are expected.