Retail Leaders Ask for Hiring and Retention Tax Incentives

April 16, 2020

The Honorable Nancy Pelosi
Speaker
U.S. House of Representatives
Washington, D.C. 20515

The Honorable Mitch McConnell Majority
Leader
U.S. Senate
Washington, D.C. 20510

The Honorable Kevin McCarthy
Minority Leader
U.S. House of Representatives
Washington, D.C. 20515

The Honorable Charles Schumer
Minority Leader
U.S. Senate
Washington, D.C. 20510

Dear Speaker Pelosi and Leaders McConnell, McCarthy and Schumer:

The Retail Industry Leaders Association (RILA) and its member companies commend the spirit of bipartisanship in passing legislation providing economic support to American families and the U.S. economy. The Coronavirus Aid, Relief and Economic Security (CARES) Act struck the right balance of helping people get through the immediate crisis and preparing businesses to get up and running when it is safe to do so.

As Congress continues its discussions to expand current law and enact new policies to help workers, families and businesses make it through this crisis, leading retailers offer a broad range of policies for your consideration. The proposals will further inject liquidity into the market, protect the workplace, and provide further incentives to encourage the retention and rehiring of retail employees.

COVID-19 is having an outsized impact on the 52 million workers that are employed in or support the retail industry. In the past two-weeks alone over one million dedicated retail workers have lost their jobs. This number is expected to climb as federal, state and local governments enforce and implement executive orders, directives, and ordinances that enact steps to stop the spread of this devastating disease.

Retailers that remain open are implementing leading practices to protect their employees and customers. We owe a debt of gratitude to these companies and their front-line workers for their dedication to ensuring every family staying home has the goods they need to ride out this pandemic. While keeping everyone safe is paramount, elected officials must also focus on the next step, which is how to safely get the 22 million Americans who lost their jobs in the blink of an eye back to work.

Yesterday, we learned from the Department of Commerce that retail sales plunged by 8.7% over the last month. This is the largest decrease ever. While there is no alternative to a functioning economy, enacting the attached package of policy recommendations will help retailers by combining financial relief measures to create needed liquidity, and forward-looking proposals that preserve the integrity of our industry until the public health crisis has passed. Combined these proposals take a three-hundred-and-sixty-degree view of the current economic, business, and employee landscape to stabilize and enhance the return of normal business practices.

It is important for everyone to work together and enact policies that will provide leading retailers the ability to reopen and rehire millions of hard-working Americans that have been negatively impacted over these two months. Again, we hope you will take these proposals under consideration as you develop future legislation because they are aimed at helping all retailers reclaim and rebuild their business foundations.

Please do not hesitate to reach to out if you have questions or need more details on these recommendations. We thank you for your leadership during these trying times.

Michael Hanson
Senior Senior Executive Vice President, Public Affairs
Retail Industry Leaders Association
Washington, DC

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 Key Legislative and Regulatory Priorities for Leading Retailers to Enhance, Stabilize and Protect the Retail Industry

Employee and Employer Regulatory and Legislative Modifications to the Coronavirus, Aid, Relief and Economic Security (“CARES”) Act and Additional Tax Measures to Increase Hiring and Provide a Safe Work Environment for Employees and Customers

Employee Retention Credit:

• The Treasury and Internal Revenue Service should take a broad interpretation of the terms “eligible employer” and “qualified wages” for businesses to qualify for the Employee Retention Credit following government orders or recommendations leading to change in business operations.

• Increase the maximum wages allowed for the credit to $20,000 per quarter.

Extend Net Operating Loss (NOL) Carryback Period:

• Extend the five-year carryback period for NOL's in the CARES Act to 10 years. This will allow additional companies to secure much needed cash to keep their businesses solvent, benefitting its employees.

Immediate Deduction of 2020 Social Security Taxes:

• The Treasury Department should use its authority to allow companies to deduct in 2020 the employer share of Social Security taxes deferred until 2021 and 2022 under the CARES Act. Current law provides the deductions to be taken in 2021 and 2022. Making this change will provide liquidity to the retail industry.

Further Extension of Filing/Payment Date Beyond July 15:

• Further extend the filing/payment date for business taxpayers to October 15 or December 15, which, will provide companies with additional liquidity.

Worker Retraining and Hiring Tax Incentives:

• Make the Work Opportunity Tax Credit (“WOTC”) permanent and create an additional category of covered employee to include those who lost jobs as a result of COVID-19. This will result in companies hiring and retraining additional workers as the economy recovers and adapts to a post COVID-19 world.

Shop Safe and Healthy Tax Credit:

Retailers have and are beginning to retrofit their stores to accommodate the installation of protective equipment to keep their employees and customers safe and healthy. These additional and unexpected costs will constrain cash flow and impact the ability for stores to install these protective health measures.

• Provide tax credits for investments/improvements required in the current and post COVID-19 environment (i.e. physical barriers, technology, expenses related to cleaning and reconfiguring stores and distribution centers . . . etc.), which will provide a safe environment for employees and customers.

Workforce and Innovation

Employees are suffering because of the devastating effects of the coronavirus on the retail industry. Retailers are supportive of the actions taken by Congress to provide additional funding to states to cover the increase in unemployment benefits. Retail workers are resilient and have interpersonal and relatable skills that will benefit any industry. Lawmakers have an opportunity to provide idled workers with the opportunity to earn additional income with no impact to their unemployment benefits.

Employees that are collecting unemployment insurance (UI) as a result of being furloughed or released from work, are being penalized under current law. Those who want to remain active in the workforce will have their unemployment insurance reduced or cancelled when they find work even if it is temporary, on-demand, or at a shift level.

• Congress should affirmatively promote and allow states to provide furloughed and laid off workers the ability to accept part time work shifts without a reduction in unemployment benefits for which the individual may be eligible. The policy would create a system where furloughed employees remain with their current employer (W2) and receive unemployment insurance — while receiving wages from part time work. This will provide incentives for people to be an active part of the workforce during emergencies, i.e., pandemic, as well as encourage UI recipients to get back into the workforce as the economy opens back up in the coming months.

• RILA commends the Congress for providing additional funding to the states to process the unemployment insurance checks for the current 22 million workers that have lost their jobs over the last month. It is crucial their claims be processed quickly and efficiently. Outside of additional funding any additional technical support from the federal government to the states to help these workers receive payment will be greatly beneficial to retail workers in desperate need of financial support.

Business and Employee Continuity and Recovery Fund

Thousands of stores have closed their doors to protect their employees and customers from contracting the novel coronavirus. As a result, millions of employees have lost their jobs and the retail industry continues to suffer financially. Retail sales plunged 8.7 percent since last month. This has created a domino effect and strained the entire business cycle. Creating a “recovery fund” that provides rapid liquidity into the business and commercial sector will benefit employees, employers, and the economy.

• Create a streamlined and tailored federal fund to provide rapid liquidity to businesses and commercial sectors impaired by COVID-19. The requested relief is targeted to help businesses retain and rehire employees, maintain worker benefits, pay rent, utilities, and resume, or continue economic activity. The fund includes anti-abuse provisions, including audits, a Special Inspector General with a Congressional Oversight Board, and would be leveraged through private sector servicers.

Pandemic Risk Insurance

Pandemics are typically not covered under business insurance policies. The spread of COVID-19 has shown a need for business interruption insurance that covers business losses caused by a pandemic. It will ensure that both insurers have the necessary financial strength to cover business losses and it will give businesses the assurance that they have access to insurance during times of great need.

• It is important for key partners in the business community and Congressional leaders to develop a federal reinsurance program similar to the Terrorism Risk Insurance Program for pandemic risks in order to promote the availability and affordability of insurance during these difficult periods.

Exchange Stabilization Fund

The Congress, Treasury and the Federal Reserve have provided funding or created financial mechanisms that are intended to help inject needed liquidity into large businesses that have been adversely affected by COVID-19. We applaud all the measures that are providing a lifeline to retail companies that are suffering under the weight of being closed for over a month. Our member companies are ready to reopen and rehire our employees once it is safe to do so.

Duty Deferral

Retailers continue to pay millions of dollars in duties even while their stores are closed to the public or their operations have been severely diminished. Continuing to pay duties is creating a real financial strain on retail companies that are struggling to pay their employees or other business expenses. Similar to the deferral of certain tax and student loan payments, deferring duties will ensure retailers are better positioned to pay or retain their employees and conserve needed capital during this protracted downturn.

• Include legislative language requiring the Department of Treasury and U.S. Customs and Border Protection to defer the collection of duty payments for at least 180 days.

Buy Safe America, Protect Consumers and Employees

During a national emergency criminals often take advantage of unsuspecting citizens by selling stolen and counterfeit consumer goods at exorbitant prices. Congress has an opportunity to protect retail customers by turning the tables on these criminal enterprises. Enacting measures that will bring transparency and accountability to online marketplaces and at the same time increase resources to the federal and state law enforcement communities will help stop this criminal activity.

• Require more seller transparency for online retail marketplaces to better enable enforcement of price gouging, fraud, and sale of stolen goods.

• Strengthen law enforcement by providing the Federal Trade Commission specific authority to bring enforcement actions for price gouging.

• Enact a Federal Organized Retail Theft Investigation and Prosecution Unit within the Department of Justice to coordinate investigations and support state investigations into organized retail criminal rings especially those taking advantage of retail customers during a crisis.