COVID–19 Youth Sports and Healthy Working Families Relief Act

To amend the Internal Revenue Code of 1986 to provide for youth sports, to amend the Small Business Act to establish a loan program for youth sports providers, and for other purposes. 1. Short title This Act may be cited as the COVID–19 Youth Sports and Healthy Working Families Relief Act 2. Modification of child and dependent care tax credit (a) Allowance of expenses for youth physical activities Section 21(b)(2)(A) and , and (iii) expenses for youth physical activities (within the meaning of section 223(d)(5)). . (b) Exception to camp rule Section 21(b)(2)(A) of such Code (as amended by subsection (a)) is amended by striking Such term Except as provided by clause (iii), such term (c) Dollar limitations Section 221(c) of such Code is amended to read as follows: (c) Dollar limit on amount creditable The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed— (1) if there is 1 qualifying individual with respect to the taxpayer for such taxable year, the sum of— (A) $3,000 of so much of employment-related expenses as are described in clauses (i) and (ii) of subsection (b)(2)(A), and (B) $6,000 of so much of employment-related expenses as are described in clause (iii) of subsection (b)(2)(A), or (2) if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year, the sum of— (A) $6,000 of so much of employment-related expenses as are described in clauses (i) and (ii) of subsection (b)(2)(A), and (B) $12,000 of so much of employment-related expenses as are described in clause (iii) of subsection (b)(2)(A). The amounts determined under subparagraphs (A) and (B) of paragraph (1) or (2) (whichever is applicable) shall each be reduced by the aggregate amount for the same categories of expenses excludable from gross income under section 129 for the taxable year. . (d) Refundable Section 21(e) of such Code is amended by adding at the end the following: (11) Credit refundable for 2020 In the case of a taxable year beginning in calendar year 2020, the credit allowed under subsection (a) (determined without regard to this paragraph and section 26(a)) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). . (e) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2019. 3. Increase in dollar amount of election for dependent care flexible spending arrangements (a) In general Section 125 (k) Limitation on dependent care flexible spending arrangements (1) In general For purposes of this section, if a benefit is provided under a cafeteria plan through employer contributions to a dependent care flexible spending arrangement, such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $10,000 made to such arrangement for each dependent under such arrangement. (2) Single parent In the case that the employee is an individual who is not married as of the beginning of the taxable year for which the employee elects to participate in the arrangement, paragraph (1) shall be applied by substituting $12,000 $10,000 . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2019. 4. Youth and family physical activities (a) In general Paragraph (1) of section 213(d) or , or (E) for qualified sports and fitness expenses. . (b) Qualified sports and fitness expenses Subsection (d) of section 213 (12) Qualified sports and fitness expenses (A) In general The term qualified sports and fitness expenses (i) for membership at a fitness facility, (ii) for participation or instruction in physical exercise or physical activity, or (iii) for equipment used in a program (including a self-directed program) of physical exercise or physical activity. (B) Overall dollar limitation The aggregate amount treated as qualified sports and fitness expenses with respect to any taxpayer for any taxable year shall not exceed $1,000 ($2,000 in the case of a joint return or a head of household (as defined in section 2(b))). (C) Fitness facility For purposes of subparagraph (A)(i), the term fitness facility (i) which provides instruction in a program of physical exercise, offers facilities for the preservation, maintenance, encouragement, or development of physical fitness, or serves as the site of such a program of a State or local government, (ii) which is not a private club owned and operated by its members, (iii) which does not offer golf, hunting, sailing, or riding facilities, (iv) the health or fitness component of which is not incidental to its overall function and purpose, and (v) which is fully compliant with the State of jurisdiction and Federal anti-discrimination laws. (D) Treatment of exercise videos, etc Videos, books, and similar materials shall be treated as described in subparagraph (A)(ii) if the content of such materials constitutes instruction in a program of physical exercise or physical activity. (E) Limitations related to sports and fitness equipment Amounts paid for equipment described in subparagraph (A)(iii) shall be treated as qualified sports and fitness expenses only— (i) if such equipment is utilized exclusively for participation in fitness, exercise, sport, or other physical activity, (ii) in the case of amounts paid for apparel or footwear, if such apparel or footwear is of a type that is necessary for, and is not used for any purpose other than, a specific physical activity, and (iii) in the case of amounts paid for any single item of sports equipment (other than exercise equipment), to the extent such amounts do not exceed $250. (F) Programs which include components other than physical exercise and physical activity Rules similar to the rules of paragraph (6) shall apply in the case of any program that includes physical exercise or physical activity and also other components. For purposes of the preceding sentence, travel and accommodations shall be treated as a separate component. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. 5. Youth sport providers loan program (a) Definitions In this section, the terms Administration Administrator (b) In general Section 7(a) of the Small Business Act ( 15 U.S.C. 636(a) (1) in paragraph (2)— (A) in subparagraph (A), in the matter preceding clause (i), by striking and (F) (F), and (G) (B) by adding at the end the following: (G) Participation in the youth sports provider loan program In an agreement to participate in a loan on a deferred basis under paragraph (37), the participation by the Administration shall be 100 percent. ; and (2) by adding at the end the following: (37) Youth sports provider loan program (A) Definitions In this paragraph— (i) the terms appropriate Federal banking agency insured depository institution 12 U.S.C. 1813 (ii) the term covered loan (iii) the term covered period (iv) the term eligible recipient (v) the term eligible self-employed individual Public Law 116–127 (vi) the term high priority area (I) working in or attracting youth participants from low income, underserved, or rural communities (based on ZIP code); (II) working with populations disproportionately affected by COVID–19 (based on ZIP code); and (III) working with populations of youth that already have low access to quality sports programs; (vii) the term insured credit union 12 U.S.C. 1752 (viii) the term nonprofit organization section 501(c)(3) (ix) the term operating losses (x) the term regular operating expenses (I) means expenses incurred in the regular operations of business and includes— (aa) payroll costs (as defined in paragraph (36)); (bb) other expenses relating to workforce support, including 1099–MISC contractors and volunteers, such as contractor fees for services, training, background screenings, or insurance; (cc) regular or necessary facilities maintenance and upkeep; (dd) supplies or materials that due to their nature are unusable at a future date and maintain only a nominal value; (ee) overhead expenses for events or programs cancelled due to COVID–19 that are not reimbursable through insurance or other means, such as nonreimbursable deposits and cancellation fees; (ff) rent (including rent under a lease agreement); (gg) payments of interest or mandatory principal payment on any mortgage obligation (which shall not include any prepayment of principal or interest on a mortgage obligation); (hh) utilities; (ii) interest or mandatory principal payment on any other debt obligations that were incurred before the covered period (which shall not include any prepayment of principal or interest on a debt obligation); (jj) marketing; (kk) insurance; or (ll) any other operational expenses, including program fee refunds, costs for referees or sports officials, software and technology, equipment, and supplies or materials that due to their nature are unusable at a future date and maintain only a nominal value; and (II) does not include— (aa) expenses permitted to be reimbursed under contract or otherwise reimbursable; (bb) expenses reimbursable under currently held insurance; or (cc) any compensation of an employee whose principal place of residence is outside of the United States; (xi) the term youth sports provider (I) means any entity or organization that has a primary purpose to provide direct sports programming or sports events to youth 18 and under, including— (aa) sports-based youth development organizations; (bb) interscholastic sports programs; (cc) youth sports providers such as coaches, trainers, and instructors; and (dd) youth sport league, camp, or event providers; and (xii) the term veterans organization (B) Covered loans (i) Youth sports provider loans Except as otherwise provided in this paragraph, the Administrator may guarantee covered loans under the same terms, conditions, and processes as a loan made under this subsection. (ii) Delegated authority For purposes of making covered loans under this paragraph, a lender approved to make loans under this subsection shall be deemed to have been delegated authority by the Administrator to make and approve covered loans, subject to the provisions of this paragraph. (iii) Additional lenders The authority to make loans under this paragraph shall be extended to additional lenders determined by the Administrator and the Secretary of the Treasury to have the necessary qualifications to process, close, disburse, and service loans made with the guarantee of the Administration. (iv) Refinance A loan made under subsection (b)(2) during the period beginning on January 31, 2020, and ending on the date on which covered loans are made available may be refinanced as part of a covered loan. (v) Nonrecourse Notwithstanding the waiver of the personal guarantee requirement or collateral under subparagraph (J), the Administrator shall have no recourse against any individual shareholder, member, or partner of an eligible recipient of a covered loan for nonpayment of any covered loan, except to the extent that such shareholder, member, or partner uses the covered loan proceeds for a purpose not authorized under clause (ii). (C) Registration of loans Not later than 15 days after the date on which a loan is made under this paragraph, the Administration shall register the loan using the TIN (as defined in section 7701 (D) Eligibility for certain small businesses and organizations (i) In general During the covered period, any youth sports provider business concern, nonprofit organization, veterans organization, or Tribal business concern described in section 31(b)(2)(C) shall be eligible to receive a covered loan if the youth sports provider concern or organization employs not more than 500 full-time employees. An eligible recipient applying for a covered loan shall make a good faith certification— (I) that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient; (II) that the eligible recipient provides direct sports programming or sports events to youth 18 and under; (III) that the eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan; and (IV) during the period beginning on February 15, 2020, and ending on December 31, 2020, that the eligible recipient has not received amounts under this subsection for the same purpose that when added to the applied for loan amount under this program will exceed $2 million. (ii) Inclusion of sole proprietors, independent contractors, and eligible self-employed individuals (I) In general During the covered period, individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible to receive a covered loan. (II) Documentation An eligible self-employed individual, independent contractor, or sole proprietorship seeking a covered loan shall submit such documentation as is necessary to establish such individual as eligible, including payroll tax filings reported to the Internal Revenue Service, Forms 1099–MISC, and income and expenses from the sole proprietorship, as determined by the Administrator and the Secretary. (iii) Payroll protection program eligibility No youth sports provider that received a covered loan under paragraph (36) shall be deemed ineligible for a covered loan under this paragraph. (iv) Employee For purposes of determining whether a youth sports provider business concern, nonprofit organization, veterans organization, or Tribal business concern described in section 31(b)(2)(C) employs not more than 500 employees under clause (i)(I), the term employee (v) Affiliation The provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor thereto, shall not apply with respect to a nonprofit organization and a veterans organization in the same manner as with respect to a small business concern. (E) Maximum loan amount (i) Allocation During the covered period, with respect to a covered loan, the maximum loan amount shall not exceed $2,000,000 and be the greater of— (I) gross receipts in 2019; or (II) 85 percent of regular operating expenses accrued since January 1, 2020, minus revenue generated over that period. (ii) Disbursement Priority consideration in the loan disbursement shall be given to nonprofits representing youth sports providers serving high priority areas. This consideration may include designating a specific amount of the loan funding allocated to be used exclusively for nonprofit providers serving high priority areas. (F) Allowable uses of covered loans During the covered period, an eligible recipient may use the proceeds of the covered loan for regular operating expenses. (G) Loan forgiveness (i) (I) Forgiveness An eligible recipient shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to percentage forgiveness multiplied by the loan amount. (II) Eligible expenses Up to 50 percent of forgiveness shall be granted for use for the eligible expenses enumerated above. (III) Additional forgiveness Additional forgiveness of the remaining 50 percent shall be prorated based on the number of youth participants in the program participating in some capacity (i.e. virtual) by December 2021 (as compared to participation rates over a comparable period in 2019). Criteria shall be developed to define this standard and take into account factors that would limit or reduce participation, such as continuing COVID–19 concerns. (IV) Treatment of amounts forgiven (aa) In general Amounts which have been forgiven under this section shall be considered cancelled indebtedness by a lender authorized under section 7(a) of the Small Business Act ( 15 U.S.C. 636(a) (bb) Purchase of guarantees For purposes of the purchase of the guarantee for a covered loan by the Administrator, amounts which are forgiven under this section shall be treated in accordance with the procedures that are otherwise applicable to a loan guaranteed under section 7(a) of the Small Business Act ( 15 U.S.C. 636(a) (cc) Remittance Not later than 90 days after the date on which the amount of forgiveness under this section is determined, the Administrator shall remit to the lender an amount equal to the amount of forgiveness, plus any interest accrued through the date of payment. . (c) Application An eligible recipient seeking loan forgiveness under this section shall submit to the lender that is servicing the covered loan an application, which shall include— (1) documentation verifying youth under the age of 18 participation numbers during the forgiveness calculation periods; (2) documentation showing expenditures of the covered loan on allowed uses; (3) a certification from a representative of the eligible recipient authorized to make such certifications that— (A) the documentation presented is true and correct; and (B) the amount for which forgiveness is requested was used to provide sports programing and sports events for youth under the age of 18; and (4) any other documentation the Administrator determines necessary. (d) Prohibition on forgiveness without documentation No eligible recipient shall receive forgiveness under this section without submitting, to the lender that is servicing the covered loan, the documentation required under subsection (f). (e) Decision Not later than 60 days after the date on which a lender receives an application for loan forgiveness under this section from an eligible recipient, the lender shall issue a decision on the application. (f) Hold harmless If a lender has received the documentation required under this section from an eligible recipient attesting that the eligible recipient has accurately verified the payments for payroll costs, payments on covered mortgage obligations, payments on covered lease obligations, or covered utility payments during covered period— (1) an enforcement action may not be taken against the lender under section 47(e) of the Small Business Act ( 15 U.S.C. 657t(e) (2) the lender shall not be subject to any penalties by the Administrator relating to loan forgiveness for the payments for payroll costs, payments on covered mortgage obligations, payments on covered lease obligations, or covered utility payments, as the case may be. (g) Taxability For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection (b) shall be excluded from gross income. (h) Rule of construction The cancellation of indebtedness on a covered loan under this section shall not otherwise modify the terms and conditions of the covered loan. (i) Regulations Not later than 30 days after the date of enactment of this Act, the Administrator shall issue guidance and regulations implementing this section. (j) Direct appropriations There is appropriated, out of amounts in the Treasury not otherwise appropriated, for the fiscal year ending September 30, 2020, to remain available until September 30, 2021, for additional amounts $8,500,000,000 under the heading Small Business Administration—Business Loans Program Account, CARES Act 15 U.S.C. 636(a) (k) Emergency rulemaking authority Not later than 15 days after the date of enactment of this Act, the Administrator shall issue regulations to carry out this title and the amendments made by this title without regard to the notice requirements under section 553(b) of title 5, United States Code. (l) Loan education (1) The SBA shall have authority to provide additional financial awards to resource partners (Small Business Development Centers, Women’s Business Centers) to provide counseling, training, and education to youth sports providers on use of loans. (2) The SBA or Treasury shall provide nonprofits representing youth sports providers serving high priority areas with grants to establish a training program on accessing resources under the program, and general financial management. (m) Fee waiver During the covered period, with respect to a covered loan— (1) in lieu of the fee otherwise applicable under paragraph (23)(A), the Administrator shall collect no fee; and (2) in lieu of the fee otherwise applicable under paragraph (18)(A), the Administrator shall collect no fee. (n) Interest rate requirements A covered loan shall bear an interest rate— (1) for the first two years, and shall be no greater than 4 percent; (2) for years 3 through 7, and shall have Applicable Federal Rate (AFR) plus 250–450 base points (bps) as determined by the Administrator based on revenue decline. (o) Loan deferment (1) Definition of impacted borrower In this section, the term impacted borrower (A) is in operation on February 15, 2020; and (B) has an application for a covered loan that is approved or pending approval on or after the date of enactment of this section. (2) Presumption For purposes of this subsection, an impacted borrower is presumed to have been adversely impacted by COVID–19.

Summary: COVID-19 Youth Sports and Healthy Working Families Relief Act This bill establishes measures to provide economic assistance to youth sports providers, programs, and organizations in response to COVID-19 (i.e., coronavirus disease 2019). Specifically, the bill (1) requires the Small Business Administration to establish a loan program for youth sports providers affected by COVID-19, (2) expands the Child and Dependent Care Tax Credit to include expenses for youth physical activities, (3) makes certain sports and fitness expenses eligible to be paid for with Health Savings Accounts and Flexible Spending Accounts (FSAs), and (4) increases the maximum contribution per household for Dependent Care FSAs.