1

Q&A: Coronavirus Economic Relief for Transportation Services (CERTS) Act

Division N, Title IV, Subtitle B of the Consolidated Appropriations Act, 2021

U.S. Department of Treasury

** Updated April 6, 2022 **

New Questions and Answers Added to the December 10th Q&A are Identified by “NEW” 

HOW TO APPLY UNDER DIFFERENT CORPORATE AND OPERATING 

STRUCTURES

Each CERTS application must be linked one-to-one to a Federal tax return. The name, TIN, 

principal business activity code, and total annual revenues reported by a company in the CERTS 

application must match to the same values on a corresponding tax return. For each application, 

the difference in total annual revenues reported on the 2019 and 2020 tax returns will be the 

primary factor in calculating the grant amount. 

The questions and answers in this section explain how this principle applies if a company has a 

complex corporate structure or if a company provides a combination of eligible transportation 

services and other ineligible services.

1. Case A: one company/TIN with multiple eligible services. Some companies provide 

multiple services that are eligible for a CERTS grant. For example, a company may 

have a mixed motor carrier fleet and provide both motorcoach services and school bus 

services as part of the same company under the same TIN and tax return. How do such 

companies categorize themselves and demonstrate their eligibility when they apply?

A company that provides more than one eligible transportation service under one TIN and tax 

return should classify itself based on the service that generates the highest percentage of its 

annual revenues, and provide proof of eligibility based on that service. After identifying the 

service that generates the most revenue, the company would still report its total annual revenues 

from all activities as part of the application. If the application is approved, the grant funds may 

be used for allowable expenses (e.g., payroll costs) in any part of the company’s business.

2. Case B: multiple eligible companies/TINs under common ownership filing separate tax 

returns. In some corporate organizations with a common ownership structure, there 

are separate companies with separate TINs and separate tax returns that each provide 

eligible transportation services. For example, one affiliate may be a motorcoach 

company filing its own tax return, and another affiliate may be a school bus company

filing its own tax return. How do entities with that corporate structure apply?

Each eligible company must submit a separate application in its own name and TIN, and must 

provide its own supporting documents, including its own annual tax return. If the applications 

are approved, each company would receive a grant based on its own reported revenue loss. 
2

3. Case C: one company/TIN with mix of eligible and ineligible services. Some individual 

companies provide a mix of eligible and ineligible services. For example, a single 

company with one TIN and tax return may provide eligible motorcoach services but 

may also generate revenues providing limousine services or acting as a travel agent. 

Are such companies eligible for a CERTS grant?

Such companies are eligible for a CERTS grant if their principal business activity – that is, the 

activity from which the company derives the highest percentage of its total sales or receipts as 

reported to the IRS – is an eligible transportation service: motorcoach services, school bus

services, passenger vessel services, or pilotage services. In addition to having a qualifying 

principal business activity code, the company must pass the other requirements for that type of 

eligible transportation service. 

After demonstrating that its principal business activity is an eligible service, the company would 

still report its total annual revenues from all activities as part of the application. If the 

application is approved, the grant funds may be used for allowable expenses (e.g., payroll costs)

in any part of the company’s business.

4. Case D: affiliated eligible companies/TINs under a common parent corporation that 

files a consolidated tax return. Some large national and regional transportation service 

providers have multiple corporate entities but file a consolidated tax return for the 

affiliated companies. Some of the affiliated companies included in the consolidated tax 

return may provide eligible transportation services and some may not provide eligible 

transportation services. How do entities with that corporate structure apply?

The common parent company or holding company that files the consolidated return must submit 

a single application in its own name and TIN reflecting the total revenues on the consolidated tax 

return. Such parent or holding companies are eligible provided the principal business activity 

reported to the IRS on the consolidated tax return is an eligible transportation service. In 

addition to uploading their consolidated tax returns, such companies must upload copies of their 

IRS Form 851 Affiliations Schedule to report the principal business activities of the affiliates. 

The common parent company would report its total annual revenues generated by all its 

subsidiaries. If the application is approved, the grant funds may be used for allowable expenses 

(e.g., payroll costs) in any part of the parent company’s business.

5. Case E: companies with bundled motorcoach services. Some companies use 

motorcoach transportation services as part of bundled excursion packages that include

other holiday and sightseeing services. Are such companies eligible if they use a 

principal business activity code that does not identify the motorcoach or passenger 

transportation industry?

The CERTS Act specifically defines as an eligible transportation service provider a company 

that offers tour or excursion service that includes features in addition to motorcoach 

transportation, such as meals, lodging, admission to points of interest or special attractions, or the 

services of a guide. Therefore, such companies are eligible if their principal business activity 
3

code identifies an acceptable industry packaged with the motorcoach service, provided they meet 

the other requirements for motorcoach companies, such as a USDOT# and information on their 

vehicle fleet. 

SUPPORTING TAX DOCUMENTS

6. Extension to file 2020 tax returns. The CERTS guidelines indicate that applicants must 

report total revenues reported to the IRS for 2019 and 2020, and must upload a copy of 

their annual corporate tax returns for 2019 and 2020. Some companies received an 

extension to file for 2020 and do not have a completed 2020 tax return. How do they

complete the application?

The application will allow companies to indicate if they do not have a 2020 Federal income tax 

return because they applied for an extension to file. Such companies must provide the amount of 

total revenues they expect to report on their 2020 tax return when they file. In lieu of uploading 

a copy of their 2020 tax return, they must upload a copy of their application for an extension to 

file (IRS Form 7004 for businesses or IRS Form 4868 for self-employed individuals) or, if they 

filed the application for extension electronically, a copy of the IRS’s electronic 

acknowledgement. They must also certify that they have internal company income statements or 

other financial statements to clearly substantiate the total annual revenues they are reporting for 

2020, and will make those documents available upon request. 

7. Use of Third-Party Payroll Providers. The CERTS guidelines indicate applicants must 

upload a copy their Employer’s Quarterly Tax Returns (IRS Form 941). Some 

companies cannot supply an IRS Form 941 in their own name and TIN because they 

contract with a third-party to process their payroll and report their payroll taxes, such 

as a payroll service provider or a Professional Employer Organization (PEO). How 

does such a company complete the application if they can’t upload their own IRS Form 

941?

Companies that do not have an IRS Form 941 to upload in their own name and TIN because they 

use a third-party payroll processor or PEO must complete and upload a standard form letter in 

lieu of an IRS Form 941. The form letter must be completed and signed by an authorized 

representative of the third-party service provider. The form letter is available here for 

download.

8. Company name/TIN on Form 941 does not match application or annual tax return. 

The CERTS application requires companies to upload a copy of their IRS Form 941 for 

Q1 2020 in their own official company name and TIN. What should a company do if 

the name and TIN on their Form 941 differs from their official company name and TIN 

entered into the application and included in their annual tax returns?

In general, the name and TIN on the Form 941 should match the official company name and TIN 

on the CERTS application and the company’s annual tax returns. However, there are specific 

instances, listed below, where the name and TIN on the Form 941 may not match the name and 
4

TIN on the CERTS application. In these instances, companies must still upload all relevant 

documents as described below. 

• Use of Third-Party Payroll Providers. The company applying does not have a Form 941 in 

its own company name and TIN because its contracts with a third-party to process payroll 

and report payroll taxes, such as a payroll service provider or a Professional Employer 

Organization (PEO). Such companies must upload a form letter signed by their service 

provider to validate their number of employees and compensation for Q1 2020. See the 

answer to question #7 “Use of Third-Party Payroll Providers.” 

• Consolidated Tax Filers. The company applying does not have a Form 941 in its own 

company name and TIN because it files its annual tax returns on a consolidated basis at the 

parent company level, but its Form 941s are filed in the names and TINs of subsidiary 

operating companies. Such companies must upload copies of each IRS Form 941 for Q1 

2020 linked to their consolidated entity to validate the consolidated number of employees 

and compensation for Q1 2020.

• Parent/holding company vs. operating subsidiary company. The company applying does not 

have a Form 941 in its own company name and TIN because an operating subsidiary

company serves as the employer and/or payroll processor for the business’s employees. Such 

companies must upload the IRS Form 941 for Q1 2020 of the operating subsidiary company, 

which should be identified in the application as a subsidiary of the company applying in the 

question requiring a listing of all parents, subsidiaries, and affiliates of the applying 

company.

REGISTRATION IN ID.ME

9. Role of ID.me registrant. The CERTS guidelines state that, to submit an application 

for a CERTS grant in the CERTS portal, a company representative must be registered 

with credentials issued through the ID.me identity service. Does the person registered 

in ID.me need to be a corporate officer?

No, the ID.me registrant does not need to be a corporate officer. The role of the ID.me registrant 

is to access the CERTS portal to answer the application questions, upload required documents, 

and perform other administrative functions in the portal. ID.me ensures that Treasury knows the 

individual accessing the government system. 

However, once the application is filled out in the CERTS portal, it must be certified with an 

electronic signature by an authorized company official who can legally bind the company, such 

as a corporate officer. The ID.me registrant filling out the application must identify the name 

and email address of the authorized company official. Once the ID.me registrant is finished 

filling out the application, a DocuSign email will be sent automatically to the authorized 

company official allowing them to electronically sign the certification statement that must 

accompany the application. 
5

The ID.me registrant who enters data into the portal and fills out the application could be (but 

does not have to be) the authorized company official who electronically signs the application

certification, as long as that person has the legal authority to bind the company. 

10. Applying for multiple companies. In some corporate organizations, there are two 

separate companies with separate TINs under common ownership that are both eligible 

for a CERTS grant, and the corporate organization will be submitting two separate 

applications. Do they need two different people – one for each company – to register in 

ID.me to enter the application data in the CERTS portal?

No, one person could be registered in ID.me to complete both applications in the CERTS portal. 

However, for each company’s application, an authorized company official must electronically 

sign a certification accompanying the application, as described above, since it is a legally binding 

document. 

DISCLOSING OTHER FEDERAL FUNDS RECEIVED IN RESPONSE TO COVID-19

11. Main Street Lending Program. The CERTS application requires disclosure of the total 

amount of Federal financial assistance received up to the date of the application, if any, 

under other Federal grant, loan, and tax credit programs in response to COVID-19. 

The application has fields to enter amounts received under the Paycheck Protection 

Program Loan, an Economic Injury Disaster Loan, and other Federal COVID-19 

response programs, but it does not specifically list the Main Street Lending Program 

(MSLP) established by the Federal Reserve System. If a company received an MSLP 

loan, must it report the amount of the MSLP loan as other financial assistance?

No. Applicants do not need to report amounts received from their bank under the MSLP 

established by the Federal Reserve System. The MSLP is not included in the definition of 

Federal financial assistance. 

REPORTING LOST REVENUES

12. Fiscal year tax filers vs. calendar year tax filers. Some companies file taxes on a fiscal 

year basis that differs from the calendar year. These companies may have not filed

their 2020 taxes yet, such as companies whose fiscal year ends in June. In addition, the 

size of lost revenues due to COVID-19 may be different if calculated on a fiscal year 

basis versus a calendar year basis. What guidance is available to assist companies that 

file their annual taxes on a fiscal year basis rather than a calendar year basis?

The CERTS application has been updated to allow companies to indicate if they file their annual 

tax returns on a fiscal year basis rather than a calendar year basis. Fiscal year tax filers will be 

prompted to provide their 2019 and 2020 revenues on both a fiscal year basis and a calendar year 

basis. These changes with instructions appear in Tab 6 “Eligibility Information” under the 

question “Lost Revenues Percentage” in the CERTS application. Moreover, the application has 

been updated to reflect that fiscal year filers may not be able to upload their 2020 annual tax 

returns because they are not due yet. 
6

REPORTING EMPLOYEE NUMBERS

13. Employees vs. 1099 Independent Contractors. The CERTS application asks companies 

several questions about numbers of employees, including the number of employees on 

March 1, 2020 and the annual average employees in 2019, and whether parents, 

subsidiaries, and affiliates of the applying company have more than 500 employees. 

When answering these questions should companies include individuals who are 1099 

independent contractors?

No, individuals who are 1099 independent contractors should not be included in the answers to 

these questions on the application. Only employees (including full-time, part-time, and 

temporary/seasonal employees) should be included in the answers to these questions. 

However, if a company is approved for a CERTS grant, the grant proceeds may be used to pay 

compensation to individuals who are 1099 independent contractors. 

PRINCIPAL BUSINESS ACTIVITY CODES

14. System Validation Messages for Principal Business Activity Codes. The CERTS 

application asks companies to enter the Principal Business Activity Code (PBAC) from 

their 2019 income tax return. In some cases, after users click the button to “Confirm 

the Code You Entered,” they receive a system message that the PBAC may not be 

related to eligible transportation services, or a message to ensure the PBAC matches 

what was entered on their 2019 tax return. If a company sees such a system message, 

does the company need to take any other action? Will their application be processed?

If a company sees such a system message, it should simply ensure the PBAC entered into the 

application matches the PBAC on its 2019 tax return, and proceed with completing the 

application, which will be processed in full. The system has been updated to remove confusing 

messages about eligibility. The only system message users may now see is to “Please make sure 

the Principal Business Activity Code you have entered matches the code as it was entered on 

your 2019 tax return, and then proceed with completing the application.”

COMPANIES IN U.S. TERRITORIES

15. Are companies in U.S. territories eligible for a CERTS grant?

Yes, private companies formed in Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa, 

and the Commonwealth of the Northern Mariana Islands are eligible for a CERTS grant. 

Companies in the U.S. territories that do not file annual income tax returns with the U.S. Internal 

Revenue Service should complete the CERTS application using information from their 

equivalent U.S. territory income tax forms. More information for companies in the U.S. 

territories is available here: Information for Companies in U.S. Territories Applying for a 

CERTS Grant.
7

GRANT PAYMENTS

16. How and when will approved grantees get paid their award?

Treasury had originally indicated that most approved applicants should expect to receive a onetime payment for the entire grant amount. However, for the reasons below, most approved 

applicants should expect to receive two grant payments: an initial payment representing 

approximately 80% of the total final grant award, and a second smaller “top off” payment to the 

extent additional funds are available to be distributed to approved grantees.

Treasury will send each approved grantee a grant agreement to sign. The initial payment will 

generally be initiated one business day after an approved grantee returns a signed grant 

agreement. The second payment will be made several weeks later to the extent additional 

CERTS funds are available to be distributed to approved grantees after Treasury completes its 

review of the entire applicant pool.

Paying the grant award in two tranches, rather than one lump sum amount, ensures that each 

approved grantee receives the bulk of its funds as soon as possible. Because CERTS grants are

formula grants, not competitive grants, Treasury must review all grant applications and approve 

or reject each one to determine the specific share each approved applicant will receive under the 

formula for calculating the awards. Only the approved applicants receive a share of the $2 

billion appropriated to the program. Rather than require each approved grantee to wait to receive 

a payment until after Treasury adjudicates every application, Treasury will make an initial 

payment representing the bulk of the grant to approved grantees on a rolling basis. Then, to the 

extent there are funds available after all reviews are completed, Treasury will make a “top off” 

payment when Treasury has determined of each grantee’s final share of the funding pool. 

The grant agreement sent to approved applicants for signature will include the amount of the 

initial payment. Treasury will notify grantees of the specific timing and amount of the second 

payment and the total final award amount.

TREASURY OFFSET

17. In some cases, the payment amount deposited into an approved grantee’s bank account 

is less than the payment amount included in the grant agreement. Why is there a 

difference?

The amount deposited may be less than the amount in the grant agreement due to Federal debt 

collection processes. To the extent prescribed by Federal law, delinquent debts owed to the 

Federal Government or a State government are collected by offsetting or levying (i.e., reducing) 

Federal payments to the debtor through the Treasury Offset Program (TOP). CERTS grant 

payments are subject to this collection process through TOP. TOP matches individuals and 

entities that owe delinquent Federal and State debts against Federal payments that are 

issued. When a match occurs, TOP withholds (offsets or levies) an amount from the payment 

necessary to repay the delinquent debt.
8

Any difference between the CERTS payment amount a grantee receives and the amount stated in 

its CERTS grant agreement is most likely due to TOP. Grantees can find more information at 

the TOP website, and through the TOP automated voice response system at 1-800-304-3107. If 

the grantee believes that the difference may be due to a levy for a federal tax debt owed to the 

Internal Revenue Service (IRS), the grantee should contact IRS at 1-800-829-7650.

RECALL AND REHIRE REQUIREMENTS

18. Are grantees obligated to recall or rehire employees that were involuntarily furloughed 

or terminated during the pandemic? If so, what are the rules for such employee recalls 

or rehires?

The CERTS statute provides that Treasury must require grantees, as a condition of receiving a 

CERTS grant, to recall or rehire any employees laid off, furloughed, or terminated after March 

27, 2020, but only to the extent recalls or rehires are warranted by service levels. The statute 

further provides that this requirement does not apply immediately, but after the date that is 30 

days after the receipt of funds. 

A grantee may offer, but is not required, to restore lost pay and benefits to rehired employees. 

Such restored employee compensation is an eligible use of grant funds.

For more detailed information on the requirements for recalls or rehires, please review this 

document on CERTS recall requirements. 

USE OF GRANT FUNDS

The following questions and answers provide a summary of key concepts governing the eligible 

use of grant funds. Grantees should review their grant agreement for the full terms and 

conditions of the grant award. 

19. What expenses are eligible uses of CERTS funds?

The following types of operating expenses are eligible uses of grant funds. (Note that the 

“effective date” of the grant agreement referenced below is the date that the grant agreement is 

signed by both the grantee and Treasury.)

Payroll costs for employees for pay days on or after the effective date of the grant agreement, 

including:

• salary, wages, commissions, and similar compensation

• cash tips or an equivalent

• vacation, parental, family, medical, or sick leave

• group health care and other group insurance benefits (such as workers’ compensation),

including premiums

• retirement benefits contributions for current employees

• State and local taxes on employee payroll (but not Federal payroll taxes or withholdings)

• paid administrative leave 
9

However, compensation paid to an individual employee in excess of an annualized salary rate of 

$100,000 (i.e., salary in excess of $8,333 per month, $3,846 per biweekly period, $1,923 per 

week, etc.) is not an eligible use of funds. In addition, any bonus or other form of additional 

employee compensation not listed above is not an eligible use of funds. 

In addition, see the answer to question #24 “What expenses are NOT eligible uses of funds?” 

which identifies certain payroll-related costs that are NOT included in the CERTS statutory 

definition of “payroll costs” and are therefore not an eligible use of funds. 

Payroll costs for independent contractors for pay days on or after the effective date of the grant 

agreement (if independent contractors are paid using the same payroll systems as employees) or 

for current expenses outstanding as of or after the effective date of the grant agreement, 

including payments to independent contractors that are wages, commissions, retainers, or similar 

compensation. However, compensation of an individual independent contractor in an annualized 

amount exceeding $100,000 (as measured and prorated during the period from the effective date 

of the grant agreement to the date on which all grant funds have been expended) is not an eligible 

use of funds. 

Payroll costs for sole proprietors drawn on or after the effective date of the grant agreement, 

including compensation or income that is a wage, commission, income, draw, net earnings from 

self-employment, or similar compensation. However, compensation or income of a sole 

proprietor in an annualized amount exceeding $100,000 (as measured and prorated during the 

period from the effective date of the grant agreement to the date on which all grant funds have 

been expended) is not an eligible use of funds. 

Certain debt incurred for payroll, specifically prepayment or repayment of principal on a debt 

obligation incurred during the COVID-19 pandemic (i.e., after March 27, 2020) for the direct 

purpose of maintaining the payment of payroll costs during the COVID-19 pandemic. Payment 

of principal on any other debt is not an eligible use of funds. 

COVID-19 protection costs for current expenses outstanding as of or after the effective date of 

the grant agreement (regardless of when they were acquired), specifically for the acquisition of 

services, equipment (including personal protective equipment), and other measures needed to 

protect workers and customers from COVID-19. 

Operations and maintenance costs related to existing capital equipment and facilities, for 

current expenses outstanding as of or after the effective date of the grant agreement, including

the cost of:

• rent

• leases

• insurance

• interest on regularly scheduled debt service related to operations and maintenance of capital 

equipment and facilities

• facilities operating costs such as utilities
10

• equipment operating costs such as fuel, tolls, access fees, licenses, tour expenses, and 

payments to vendors or subcontractors providing or operating equipment

• facilities maintenance costs such as upkeep and non-capital repairs

• equipment maintenance costs such as engine repair, parts, servicing, and payments to 

vendors or subcontractors providing equipment maintenance services. 

Restored compensation for returning employees paid on or after the effective date of the grant 

agreement, including lost pay and benefits during the COVID-19 pandemic. However, 

compensation paid to a returning employee for lost pay and benefits must be offset by any 

previous furlough pay, severance pay, or separation pay, as well as by any amounts a returning 

employee received from unemployment insurance. 

20. Can a grantee use funds to reimburse itself for old expenses it already paid during the 

pandemic prior to the effective date of the CERTS grant agreement, such as rent or 

salaries paid out earlier in 2021?

No. Reimbursing a grantee’s own company account for old expenses paid prior to the effective 

date of the grant agreement is not an eligible use of CERTS grant funds. 

21. Can a grantee use funds to make payments or transfers into grantee, subsidiary, or 

affiliate accounts maintained for reserves or accruals?

No. Payments, transfers, or credits into internal accrual accounts, reserve fund accounts, 

contingency accounts, and that do not represent a disbursement for actual eligible expenses are 

not an eligible use of CERTS grant funds. 

22. Are grantees mandated to use at least 60% of grant funds on payroll costs?

In general, the CERTS statute requires grantees to use at least 60% of grant funds on payroll 

costs, which include payroll for employees, independent contractors, and sole proprietors, and 

restored compensation for returning employees (see the answer to question #19 for a more 

detailed explanation of eligible payroll costs). The remainder of funds may be used on 

operations and maintenance, COVID-19 protection measures, and repayment of debt specifically 

accrued during the pandemic to maintain payroll. 

However, a grantee may use less than 60% of grant funds on payroll costs if the grantee can 

make certain certifications about its current employee and pay levels that demonstrate it should 

not be required to use 60% of funds on payroll costs. Specifically, a grantee may use less than 

60% of funds on payroll if the grantee is able to certify, after making adjustments for retirements

and voluntary employee separation, it already has offered certain rehire opportunities and reestablished certain salaries that were reduced, it already has seasonal employees equivalent to 

2019 levels, and it will fully pay its employees while it has grant funds available. See paragraph 

6 of the CERTS grant agreement for the specific certification requirements. 
11

23. Can funds be used for the payroll of executive employees?

Yes. However, compensation paid to any individual employee in excess of an annualized salary 

rate of $100,000 (i.e., salary in excess of $8,333 per month, $3,846 per biweekly period, $1,923 

per week, etc.) is not an eligible use of funds. Similarly, compensation or income to a sole 

proprietor in an annualized amount exceeding $100,000 (as measured and prorated during the 

period from the effective date of the grant agreement to the date on which all grant funds have 

been expended) is not an eligible use of funds. 

24. What expenses are NOT eligible uses of funds?

The CERTS statute provides that a grantee “shall use assistance provided...only for” the expense 

categories listed above in the answer to question #19. 

Therefore, the following types of expenses, among others, are not eligible uses of funds: 

• capital expenditures 

• taxes of any kind (except for payroll taxes paid to a State or local government, but not payroll 

taxes or withholding paid to the Federal Government) 

• payment or prepayment of principal on any debt, whether a loan, bond, note, mortgage, or 

other indebtedness (except for principal on a debt obligation accrued during the COVID-19 

pandemic for the direct purpose of maintaining the payment of payroll costs during the 

COVID-19 pandemic)

• payment of refunds to customers

In addition, any expense for which funding or financing has been awarded, sub-awarded, or 

otherwise provided through another Federal program is not an eligible use of funds. That is, 

CERTS grantees cannot charge or claim the same expense to more than one Federal assistance 

program. 

Finally, the CERTS statute specifically lists the following expenses as ineligible uses of funds: 

• Federal payroll and withholding taxes under chapters 21 (Federal Insurance Contributions 

Act), 22 (Railroad Retirement Act Tax), or 24 (Collection of Income Tax at Source on 

Wages) of the Internal Revenue Code of 1986.

• any compensation of an employee whose principal place of residence is outside the United 

States 

• any qualified sick leave wages for which a credit is allowed under section 7001 of the 

Families First Coronavirus Response Act (26 U.S.C. § 3111 note, Public Law 116–127) 

• any qualified family leave wages for which a credit is allowed under section 7003 of that Act 

(26 U.S.C. § 3111 note, Public Law 116–127) 

• any bonus

• a raise in excess of inflation

• any other form of additional employee compensation not included in the CERTS definition 

of payroll costs (see the CERTS definition of “payroll costs” in the answer to question #19

above, or in the definitions section of the CERTS grant agreement). 
12

25. What documents or records does a grantee need to maintain to demonstrate that funds 

were used only for eligible purposes?

The CERTS grant agreement requires grantees to maintain records on the use of grant funds, to 

substantiate the information reported on the grantee’s end-of-quarter reports to Treasury, and to 

maintain those records for a minimum of three years. (Grantees should review paragraph 12 of 

the CERTS grant agreement for the requirements on quarterly reports. Treasury will issue 

separate guidance on the form of and manner of filing quarterly reports.) 

The specific records maintained to substantiate the use of funds for eligible purposes may differ 

by grantee, depending on a grantee’s business, record keeping systems, payroll process, banking 

arrangements, and ledgers or accounting systems. Electronic storage of records is preferrable, 

but records may be in hardcopy paper. The records must document both the eligible nature and 

the date of expenses. Below are illustrative examples of the types of records that should be 

retained to document eligible expenses.

Payroll costs for employees: internal company payroll reports or payroll service provider 

reports; Employer’s Quarterly Federal Tax Returns (IRS Form 941); State income, payroll, and 

unemployment insurance filings; receipts for employer contributions to group benefit plans; 

receipts for retirement plan contributions for current employees.

Payroll costs (draws) of sole proprietors: documents substantiating sole proprietor draws such 

as bank account statements; Schedule C (IRS Form 1040).

Payroll costs related to independent contractors: payroll reports (if independent contractors are 

paid using the same systems as employees), invoices, or bills; receipts, cancelled checks, or 

accounts statements verifying payments; work contracts documenting hourly rates, project fees, 

retainer fees, or commissions; IRS Form 1099-NEC.

Debt incurred to maintain payroll during the pandemic: loan agreements, promissory notes, or 

similar evidence of incurring indebtedness; loan or debt account statements; payroll reports 

during the pandemic; payment receipts, cancelled checks, or bank account statements verifying 

expenditures for principal repayment.

COVID-19 protection costs: invoices, orders, or purchase orders; receipts, cancelled checks, or 

bank account statements verifying COVID-19 related expenditures.

Rent and lease payments: rent or lease agreements; monthly payment statements; payment 

receipts, cancelled checks, or bank account statements verifying expenditures. 

Insurance payments: insurance bills, premiums statements, or renewal certificates; payment 

receipts, cancelled checks, or bank account statements verifying expenditures. 

Interest on regularly scheduled debt service: amortization schedules or debt service schedules; 

mortgage or loan account statements; payment receipts, cancelled checks, or bank account 

statements verifying expenditures. 
13

Facilities operating and maintenance costs: utility bills, invoices, orders, or purchase orders; 

payment receipts, cancelled checks, or bank account statements verifying expenditures.

Equipment operating and maintenance costs: invoices, orders, or purchase orders; payment 

receipts, cancelled checks, or bank account statements verifying expenditures.

Restored Lost Pay and Benefits for Returning Employees: internal company payroll reports or 

payroll service provider reports; Employer’s Quarterly Federal Tax Returns (IRS Form 941); 

State income, payroll, and unemployment insurance filings; receipts for employer contributions 

to group benefit plans; receipts for retirement plan contributions for current employees. (Note: 

this documentation must include amounts for any previous furlough pay, severance pay, or 

separations pay, which must be offset from any compensation for lost pay and benefits paid to 

returning employees.)

26. Can a grantee transfer grant funds to its operating subsidiaries, or use the grant funds 

to pay a related party, such as an affiliate under common control with the grantee?

The CERTS grant agreement sets forth the following definitions and requirements for 

transferring or paying grant funds to subsidiaries and affiliates of the grantee receiving the grant 

award.

Covered subsidiaries. A covered subsidiary is defined in the grant agreement as a company that 

is controlled by the grantee and whose income and deductions are included in the tax return filed 

by the grantee, such as an operating company that does not file its own taxes separate from the 

grantee company. 

Covered subsidiaries are subject to all the terms, conditions, and reporting requirements in the 

grant agreement (including the restrictions on involuntary terminations and furloughs, and on 

reducing employee pay and benefits), and the grantee may transfer funds to a covered subsidiary 

for any eligible expense of the covered subsidiary.

Independent subsidiaries. An independent subsidiary is defined in the grant agreement as a 

company that is controlled by the grantee, but that files its own tax returns separate from the 

grantee company or whose income or deductions are reflected in the tax return of a company 

other than the grantee. 

Independent subsidiaries are not automatically covered by the terms, conditions, and reporting 

requirements of the grant agreement. However, the grantee may use grant funds to pay or 

reimburse an independent subsidiary for payroll costs of employees performing necessary 

operating functions for the grantee, in which case the independent subsidiary is considered a 

“covered subsidiary” and the terms, conditions, and reporting requirements of the grant 

agreement are triggered and will apply to the independent subsidiary. In addition, the grantee 

may use grant funds to pay or reimburse an independent subsidiary for other eligible services or 

goods provided to the grantee (provided such services or goods are under ordinary course terms), 

in which case the independent subsidiary is considered a “covered subsidiary” and the terms, 
14

conditions, and reporting requirements of the grant agreement are triggered and will apply to the 

independent subsidiary. 

Affiliates. An affiliate is defined in the grant agreement to include a company that is under 

common parent control with the grantee. The term does not include any covered subsidiary or 

independent subsidiary of the grantee. 

Affiliates are not automatically covered by the terms, conditions, or reporting requirements of 

the grant agreement. However, the grantee may use grant funds to pay or reimburse an affiliate 

for payroll costs of employees performing necessary operating functions for the grantee, 

provided the grantee certifies that the affiliate has agreed to comply with the terms, conditions, 

and reporting requirements of the grant agreement. In addition, the grantee may use funds to pay 

or reimburse an affiliate for other eligible services or goods provided to the grantee, provided 

such services or goods are under ordinary course terms, and provided the grantee certifies that 

the affiliate has agreed to comply with the terms, conditions, and reporting requirements of the 

grant agreement. 

27. Is advertising for the grantee’s business an eligible use of funds? 

Advertising is an eligible use of funds provided it relates directly to (1) the grantee’s provision of 

transportation services and (b) the operation of the grantee’s existing equipment and facilities.

An example of an eligible use of funds is advertising for a tour that is provided using the

grantee’s existing motorcoaches. Advertising that meets these criteria is an eligible use of funds 

because it satisfies the CERTS statutory requirement to use funds on the continued operation and 

maintenance of existing capital equipment and facilities. Advertising that does not satisfy this 

CERTS statutory requirement, however, is not an eligible use of funds. 

28. Is the purchase of office equipment and supplies an eligible use of funds? 

Purchase of office equipment and supplies is an eligible use of funds provided it (a) relates 

directly to the operation or maintenance of an existing facility and (b) does not represent a capital 

expenditure or purchase of a fixed asset. Purchase of office equipment and supplies that meets 

these criteria is an eligible use of funds because it satisfies the CERTS statutory requirement to 

use funds on the continued operation and maintenance of existing facilities. Purchase of office 

equipment and supplies that would be treated as in the normal course of business as a capital 

expenditure (or as property that would be depreciated) is not an eligible use of CERTS funds. 

29. Are bonuses an eligible use of funds? 

No. Under the CERTS statutory definition of “payroll costs,” eligible payroll costs do not 

include “any bonus, raise in excess of inflation, or other form of additional compensation.” 

Although small hiring and retention bonuses may be customary in some transportation service

industries – for example, when hiring new school bus drivers – the CERTS statute does not allow

for funds to be used to pay bonuses or forms of compensation not specifically listed in the 

CERTS definition of “payroll costs.”
15

30. Can CERTS funds be used to make lump sum payments to employees for restored 

compensation? 

If an employee was terminated or furloughed during the pandemic, then subsequently rehired, 

the CERTS statute permits the grantee to use funds to make a lump sum payment to returning 

employees for restored compensation representing lost pay and benefits. 

If an employee was not terminated or furloughed during the pandemic, but remained on payroll 

and worked reduced hours, any amounts representing restored compensation for the lost hours 

should be included in normal payroll cycles and would be subject to the CERTS prohibition on 

compensation of in excess of an annualized salary rate of $100,000, i.e., any compensation in 

excess of $8,333 per month, $3,846 per biweekly period, $1,923 per week, etc. Thus, using 

CERTS funds for restored compensation in this instance is allowable, but it may need to be paid 

out in increments with the normal payroll cycle. 

31. If the CERTS grantee is acquired by another company or merged into another 

company after receiving a CERTS grant, can the CERTS funding continue to be used 

after the acquisition or merger? 

In general, yes. If the corporation that is the official CERTS grantee is wholly acquired and 

becomes a corporate subsidiary of the acquiring entity or is merged into another entity, the 

CERTS funding may continue to be used for the eligible expenses by the acquirer or the 

surviving entity of the merger transaction.

If an acquisition or merger transaction involving the grantee results in a change in control of the 

grantee, or the dissolution of the grantee, the grantee is required under the grant agreement, as 

well as the CERTS quarterly report, to promptly notify Treasury with a written description of the 

events and circumstances surrounding the relevant transaction. Grantees are obligated to provide 

such notice to ensure Treasury understands how the change may affect the official corporate 

entity or entities that are subject to the terms of the grant agreement. 

BANK ACCOUNT GARNISHMENT

32. Will Treasury allow CERTS funds deposited into a grantee’s bank account to be 

subject to garnishment by a judgement creditor, or to seizure by the grantee’s bank for 

debts owed to the bank, or to similar actions or proceedings under State law?

No. The CERTS statute and Treasury’s implementing guidelines do not contemplate that

CERTS funds deposited into a grantee’s bank account will be subject to garnishment, debt 

collection by a bank, and other similar actions or proceedings under State law. As the grantor 

Federal agency, Treasury retains its interest in the grant funds in a grantee’s bank account until 

they are expended by the grantee for statutorily eligible purposes (or returned to Treasury). The 

CERTS statute and grant agreement contain specific restrictions on the eligible uses of grant 

funds, the conditions for receipt of funds, and audit and compliance requirements. As a general 

matter, garnishment, debt collection, and other similar actions or proceedings under State law 
16

would prevent grantees from complying with these requirements and would be contrary to the 

purposes and uses Congress specified for CERTS grants.

EFFECTIVE DATE OF GRANT AGREEMENT

33. Several CERTS documents refer to the “effective date of the grant agreement.” What 

is the effective date of a grant agreement? 

The effective date of a CERTS grant agreement is the date on which Treasury signed the CERTS 

grant agreement. A grantee may find this date on the last page of their CERTS grant agreement.

TAX TREATMENT OF CERTS GRANT

34. NEW: Is the CERTS grant taxable to the Recipient? 

Yes. A federal grant is ordinarily taxable unless stated otherwise in the legislation authorizing 

the grant. Each grant issued pursuant to the Coronavirus Economic Relief for Transportation 

Services (CERTS) Act, Division N, Title IV, Subtitle B of the Consolidated Appropriations Act 

of 2021, is gross income, that is fixed in amount. 

The amount of the grant paid to the grant recipient is reportable pursuant to Internal Revenue 

Code section 6041. Form 1099-G, Certain Government Payments, is used to report taxable 

grants from governments.

CERTS Grantees will need to report the total sum of all payments made to their company in 

2021 by the CERTS Program on their federal income tax return. 

35. NEW: Are CERTS grant funds used for eligible activities, such as for certain payroll 

costs or acquisition of services and equipment for COVID-19, deductible? 

Yes. The Internal Revenue Code (Code) generally permits the payment of wages, salaries, and 

benefits to employees and other amounts paid to carry on a trade or business to be deducted as 

ordinary and necessary business expenses. Please contact your accountant or tax preparer to 

determine any business expenses are deductible under the Code.

Please refer to the IRS website link titled “IRS Information on the Tax Treatment of CERTS 

Grants,” for more information: www.Treasury.gov/CERTS