On August 8, 2020, President Trump issued an executive order and three presidential memoranda to address concerns created by the COVID pandemic. The Executive Order addressed assistance for renters and homeowners while the memoranda addressed student loan relief, deferring the payroll tax, and unemployment benefits.
What is the difference between an executive order and a presidential memorandum?
Very little. Both are directives issued by the President of the United States to govern actions by government officials and agencies. The significant differences are that: (1) the President, in an executive order, must cite to the authority the President to issue the order, whereas a Presidential memorandum does not require this; and (2) the White House Office of Management and Budget must report on the costs of an executive order, but not a Presidential memorandum.
What do the new executive order and memoranda do?
Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners
In this order, President Trump cites his authority under the Constitution to direct the Secretary of Health and Human Services and the Director of the CDC to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary” to prevent the spread of COVID-19. The Secretary of the Treasury and the Secretary of Housing and Urban Development “shall identify any and all available Federal funds to provide temporary financial assistance to renters and homeowners who” are behind on rent or mortgages due to COVID. The Secretary of Housing and Urban Development “shall take action…to promote the ability of renters and homeowners to avoid eviction or foreclosure” such as “providing assistance to public housing authorities, affordable housing owners, landlords, and recipients of Federal grant funds”. Finally, the Secretary of the Treasury shall review all existing authorities and resources “that may be used to prevent evictions and foreclosures” caused by COVID-19.
The order does not directly create any aid or programs for renters or homeowners in need, nor does it directly create or extend an eviction moratorium. The order does not compel or prohibit any actions beyond compelling various cabinet members to “consider” or “identify” various actions or funding.
While not related to the executive order, the Federal Housing Finance Agency (FHFA) announced new policies applicable to multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac and whose loans for such properties are subject to a forbearance agreement. While in forbearance, these property owners cannot evict tenants solely for the nonpayment of rent. Tenants are also subject to additional protections during repayment periods, such as entitlement to a 30-day notice to vacate, no late fees or penalties for nonpayment of rent, and flexibility in paying owed rent over time and not in a lump sum. The FHFA is now requiring property owners subject to a forbearance agreement to inform tenants in writing about these protections.
Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019
This memorandum creates the potential for an extra $400-per-week unemployment benefit to replace the expired $600-per-week payment authorized by the CARES Act by authorizing payments from the FEMA Disaster Relief Fund. To get this benefit for unemployed residents, states would need to enter into an agreement with the FEMA Administrator where the state would be obligated to pay 25%, or $100, of the weekly benefit per recipient in exchange for FEMA paying the remaining 75%, or $300. The memorandum suggests that states use unpaid funding allocated by the CARES Act to pay their share. However, Trump administration has hinted that the order may be amended to provide 100% of funding for states that request it.
The memorandum requires governors to administer financial assistance in conjunction with the states’ unemployment insurance systems (Sect. 4(b)(ii)). However, states may not be able to use existing unemployment insurance structures for programs that are not authorized by law.
At any rate, this memorandum authorizes such payments from the Disaster Relief Fund, which currently has $70 billion available, until the fund is depleted to $25 billion or until December 6, 2020, whichever occurs first. Claimants are eligible for weeks they would receive at least $100 per week under state unemployment law or PUA and PEUC under the CARES Act. Payments are retroactive back to the week ending August 1, 2020. As a practical matter, these payments will not begin unless/until the state completes its necessary steps to implement the program. As of this writing, the Wisconsin Department of Workforce Development has indicated is awaiting guidance from the US Department of Labor in order to implement this program.
Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster
In this memorandum, President Trump directs the Secretary of the Treasury to use his authority pursuant to 26 USC 7508A to defer the withholding, deposit, and payment of payroll taxes imposed by 26 USC 3101(a) (FICA) and 26 USC 3201 (Railroad Retirement Tax Act) between September 1, 2020 and December 31, 2020. This amounts to the 6.2% of employee’s paychecks, which would normally be withheld to pay for the “old-age, survivors, and disability insurance” portion of the FICA tax (aka social security). The remaining 1.45% of pay withheld under FICA, for Medicare hospital insurance, would still be withheld as normal. The deferment, without penalty, is available with respect to any employee who makes less than $4,000 pre-tax during any bi-weekly pay period. The memorandum directs the Secretary of the Treasury to explore avenues to eliminate the obligation to pay the taxes deferred under the memorandum.
Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic
President Trump issues directions to the Secretary of Education in this memorandum. The Secretary shall, under 20 USC 1087e(f)(2)(D) defer mandatory payments and temporarily set interest rates to 0% on student loans held by the Department of Education until December 31, 2020. As under the CARES Act, individuals may continue to make student loan payments if they desire to do so.
As always, if you wish to discuss the obligations of your business under these new memoranda or the executive order, or any state or local orders put in place during the COVID-19 pandemic, feel free to contact Kramer, Elkins & Watt, LLC at 608-709-7115 or email us at firstname.lastname@example.org.
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