Legislative and regulatory developments ACA International is watching from Washington, D.C. Editor’s note: This article is available for members only.
3/16/2020 12:00
By Leah Dempsey
Vice President and Senior Counsel, Federal Advocacy
While the nation continues to grasp the short, and long-term, impact of coronavirus (COVID-19), ACA International is engaged at the federal level as lawmakers and regulators continue to make decisions that impact the accounts receivable management industry. The U.S. Senate remains in session this week and is expected to continue to move legislation that ACA is closely watching to provide feedback on behalf of the industry
Below is a summary of some of the recent developments that are relevant to the ARM industry:
The Families First Coronavirus Response Act (H.R. 6201)
This legislation passed, with bipartisan support, by a 363-40 vote in the U.S. House of Representatives March 14. The U.S. Senate is expected to take up the legislation this week. As of Monday, there was still a hold on the bill, which is stopping it from moving forward by unanimous consent. President Donald Trump supports the legislation and it is expected to pass the Senate at some point this week.
The bill has several pieces to help combat COVID-19. There are also several aspects of it that small-business owners, including those in the ARM industry, should review for any impact on operations and tax planning.
Some of the provisions in the bill that employers should review are the required sick days, paid leave offered through expanding the Family and Medical Leave Act (FMLA), and the associated tax credits. The House Committee on Appropriations provided a summary of the bill that ACA urges members to review.
As noted in the summary, the legislation requires employees and government employers to provide employees two weeks of paid sick leave, paid at the employee’s regular rate, to quarantine or seek a diagnosis or preventive care for coronavirus; or paid at two-thirds the employee’s regular rate to care for a family member for such purposes; or to care for a child whose school has closed, or where child care provider is unavailable due to the coronavirus.
- Full-time employees are entitled to two weeks (80 hours) and part-time employees are entitled to the typical number of hours that they work in a two-week period.
- The bill ensures employees who work under a multi-employer collective agreement and whose employers pay into a multi-employer plan are provided with leave.
The bill also outlines tax credits that can be provided for the leave. As outlined by Brownstein, Hyatt, Farber, and Schreck the credits work as follows:
Payroll credit for required paid sick leave
- 100% refundable tax credit up to wages of $200 a day in the event sick leave is taken to care for a family member. Otherwise, $511 a day, not to exceed 10 days of wages.
- Credit may not exceed federal payroll taxes paid on all wages (6.2%).
(Note the amounts above total payroll tax liability are refundable through checks issued by the IRS.)
Payroll credit required for paid family leave is
- 100% refundable tax credit up to wages of $200 a day or $10,000 annually per employee on payroll tax liability.
- Credit may not exceed federal payroll taxes paid on all wages (6.2%).
(Note the amounts above total payroll tax liability are refundable through checks issued by the IRS.)
If passed by the Senate and signed by the president, the requirements under the legislation would expire on Dec. 31, 2020. Notably, the legislation also includes a provision that could allow the Department of Labor to provide regulations to exempt employers with less than 50 employees. The Senate is also expected to offer amendments to the House version of the legislation.
Federal Student Loan Interest Rate
On March 13, President Trump announced that he was taking action to eliminate the interest on federal student loans “until further notice” as part of an Executive Order. The directive, which became effective immediately, waives the requirement that borrowers pay interest on federally held loans, including loans in income-driven repayment and loans in forbearance. Legislation from last fall, the “Stop Debt Collection Abuse Act” (H.R. 4403) sponsored by U.S. Reps. Emmanuel Cleaver, D-Mo., and Rep. French Hill, R-Ark., included provisions limiting the ability to charge interest on principle amounts. In regard to that bill, ACA previously reported that the Fair Debt Collection Practices Act already requires that fees and interest can only be charged if expressly authorized by the agreement creating the debt or permitted by law. Student loan servicers have announced that they are working to implement the president’s directive, and ACA and others are still waiting for additional details about this action.
Letter from HFSC Chairwoman Maxine Waters, D-Calif.
Last week, House Financial Services Committee Democrats reached out to multiple financial services industry participants noting that, “Financial services regulators recently issued a statement to encourage financial institutions to be flexible and help meet financial needs of consumers affected by coronavirus.” The committee asked for information about how financial services participants are responding with prudent workout arrangements that are consistent with safe-and-sound lending practices. ACA reached out to both Democrat and Republican committee staffs to deliver the message that ACA and our members share Chairwoman Waters’ commitment to ensuring that consumers are treated fairly and can continue to access credit and services during these difficult times. ACA has offered to continue to provide data and feedback on behalf of the ARM industry.
Consumer Financial Protection Bureau
In late February, the CFPB released a 103-page Supplemental Notice of Proposed Rulemaking (SNPRM) concerning out-of-statute debt. Comments are currently due on May 4. Considering the challenges throughout the country, ACA reached out to the CFPB Monday to urge them to extend the comment period for 30 additional days to allow for stakeholders to have adequate time to provide public comment on the SNPRM. After the request, on March 20, the CFPB announced the comments are now due on June 5, 2020.
The CFPB also released a blog on Monday offering financial tips while federal, state and local governments work to respond to the coronavirus. The CFPB blog includes suggestions for addressing outstanding debts.