As the retail industry attempts to adapt to coronavirus-induced store shutdowns and waning consumer confidence, industry trade organizations are continuing to call for federal government aid.
On Thursday, an National Retail Federation (NRF) letter to Congress outlined what its members believe should be the priorities in the next coronavirus relief economic stimulus package.
Liability reform, business tax relief, Paycheck Protection Program (PPP) enhancements, rent forgiveness and pandemic risk insurance were among the key issues addressed by the group.
The NRF described a desire to see measures that would shift liability from employers whose employees experience COVID-19 related personal injuries on the job. The group is also evaluating no-fault alternatives to civil litigation that would result in fast, efficient employee compensation in the event that a staff member contracts the virus while at work.
To expand upon tax provisions laid out in the CARES Act, which were meant to provide businesses with additional liquidity to help retain their workforces, the NRF recommended the monetization of 2020 net operating losses (NOLs).
As laid out by the CARES Act, businesses were able to carry losses back for five years in order to obtain IRS refunds and offset tax liability, but the NRF argued that many businesses can’t afford to wait until next year’s tax filing period to apply for this benefit.
“Congress should permit businesses to monetize a portion of anticipated 2020 losses based on an estimate of the loss for the first quarter of the year,” it wrote, adding that Congress should allow NOLs from 2020 to be carried back for 10 years.
The next iteration of a relief bill should also enact a Healthy Workplace Tax Credit, NRF insisted, which would cover the cost of personal protective equipment, cleaning supplies, deep cleaning costs, and the costs of new digital, contactless payment systems and other tools needed to promote social distancing.
NRF said employers with more than 100 employees should be able to use the Employee Retention Tax Credit for workers who are still performing some service to their businesses.
According to the NRF, a Rent Forgiveness Program is necessary to help businesses avoid catastrophe while lay the groundwork for economic recovery.
New measures should protect families and businesses from downgrades to their credit scores due to missed rent payments through the crisis, and provide residential and business tenants with funding to pay their rent for up to three months, from June through August, in accordance with certain conditions.
Enhancements to PPP
Program eligibility for the PPP should be expanded, NRF said, to include greater access for a larger number of significantly impacted small businesses while public measures keep customers at home.
That means allowing small businesses with multiple locations to take advantage of the program, the NRF said. The original provisions of the CARES Act stipulate that the PPP loan is for businesses with fewer than 500 total employees. Exemptions should be granted to retail and entertainment companies, it added.
The size of PPP loans should also be augmented to cover payroll and non-payroll expenses. At present, maximum loan size is 2.5 times the average monthly payroll, which NRF said was inadequate for small businesses seeking to pay other bills and invoices during the covered period.
For businesses with few or even zero customers, loan forgiveness should be more flexible. The CARES Act requires that businesses that accept loans re-hire all furloughed employees, but without customers to serve, additional funds are not coming in to help cover other basic business costs.
Finally, NRF asked that the PPP be extended to cover “the worst months of the economic slowdown.” With funding expected to run out in the coming weeks and the covered period ending on June 30, it’s likely that small businesses will need more funding to float them through the next few months. NRF is seeking an extension of the PPP’s covered period through December.
To help facilitate workers’ safe return to their places of employment, federal assistance should be provided to streamline state unemployment systems, regulate public safety guidelines and support workforce development programs to help train workers for re-employment.
NRF also supports a bill led by Rep. Nydia Velasquez (D-N.Y.) that would create a Federal Business Interruption (BI) and Workers Compensation Fund to help small businesses and help with employee retention.
The NRF wrote that the continued responsibility of paying off tariffs has resulted in “urgent liquidity issues for businesses of all sizes.”
While the administration recently deferred due dates on certain tariffs and associated fees, many companies have been unable to take advantage of the benefits due to the measure’s limited scope.
In order to address that problem, the NRF recommended a “variety of options” including waiving customs and duties on COVID-19-related medical and sanitation goods, extending the duty deferral to cover all imports through May and June, implementing an automatic renewal of the expiring China Section 301 tariff exclusions, refunding tariffs paid to-date, and renewing the Generalized System of Preferences program as well as the Miscellaneous Trade Bill.
The NRF urged the federal government to enact measures that would help the United States Postal Service (USPS), which services many small retail businesses. The embattled service provider could run out of cash by September if aid is not provided.
The trade organization also urged lawmakers to consider prioritizing U.S. infrastructure—like seaports, airports, rail lines and highways—which helps transport retail products.
“The condition of the U.S. freight transportation system is vital to American competitiveness, and especially the retail industry, which must be able to deliver goods to consumers at bricks-and-mortar stores or through direct-to-consumer options,” the group said, adding that the next stimulus bill must contain investments in infrastructure, planning and efficiencies in order to help companies remain competitive.