Correcting The Record On The CARES Act Tax Rebates: Oil, Solar, Airlines, Retail, & More All Benefit

Currently, there are reports circulating that imply Congresswoman Alexandria Ocasio-Cortez and Senator Bernie Sanders voted in favor of a “stealth bailout for the oil and gas industry.” The tax provision that was incorrectly labeled a “stealth bailout” in one publication's headline was passed by both houses of Congress—which was aired on CSPAN—and was signed by the U.S. President during a signing ceremony broadcast on TV.

As Bloomberg notes, albeit several paragraphs down, the referenced tax provision “wasn’t aimed only at the oil industry,” is “widely available across all industries” and the tax provision was embedded by Congress into “the stimulus measure early on.”

Despite this, some agenda driven individuals are manufacturing outrage because American companies are claiming tax deductions from a tax provision designed by a bi-partisan Congress to... help American companies.

“Our industry’s companies and workers have access to the same economy-wide programs included in the CARES Act, which Congress passed with near unanimous support. Companies across the economy – from airlines and manufacturers to farmers and retailers – are taking into account the latest tax provisions approved by Congress, which are not unique to our sector and apply to all businesses that are experiencing financial hardship during the COVID-19 pandemic.” – Stephen Comstock, API Vice President of Corporate Policy

Oil Companies, Solar Companies, Airlines, Retail, Restaurants And More Are All Benefiting From The Same Tax Provision

First Solar, Inc. recorded a “$88.7M discrete tax benefit from the effect of tax law changes associated with the CARES Act” during the three months ended March 31, 2020. “Income tax benefit increased by $87.8 million during the three months ended March 31, 2020 compared to the three months ended March 31, 2019 primarily due to an $88.7 million discrete tax benefit from the effect of tax law changes associated with the CARES Act.” (First Solar, Inc., Form 10-Q, 3/31/20, p.52)

Vivint Solar, Inc. recorded a “$5.3M of benefit from the net operating loss carryback provisions pursuant to the CARES Act” during the three months ended March 31, 2020. “The $4.1 million decrease in income tax expense was primarily attributable to $5.3 million of benefit from the net operating loss carryback provisions pursuant to the CARES Act, a tax-effected $4.1 million increased loss before income taxes, and a $2.0 million increased equity compensation windfall.” (Vivint Solar, Inc., Form 10-Q, 3/31/20, p.33)

JetBlue: “The Company's effective tax rate was 24.3% and 28.3% for first quarter 2020 and 2019, respectively. The change in tax rate, as compared to the prior year period, is due to several factors including a $12.1M discrete federal tax benefit recorded in the first quarter of 2020 related to the carryback of net operating losses. Our effective tax rate through 2020 may be subject to change related to discrete items recorded as additional CARES Act implementation guidance is released.” (JetBlue, Form 10-Q, 3/31/20, p.13)

Spirit Airlines: “The increase in tax rate, as compared to the prior year period, is primarily due to a $31.1M discrete federal tax benefit recorded in the first quarter of 2020 related to the passage of the CARES Act. The CARES Act allows for carryback of net operating losses generated at a 21% tax rate to recover taxes paid at a 35% tax rate.” (Spirit Airlines, Form 10-Q, 3/31/20, p.8)

National Retail Federation: “‘For retailers, liquidity in the form of tax provisions or access to credit is “the most important support they can get … until consumers are back in the marketplace,’ the letter said.”

• “‘Net operating loss carryback’ has been restored for tax years 2018-2020. This means companies that have a loss will be able to “carry back” the loss to profitable years up to five years earlier and quickly obtain refunds.” (National Retail Federation, 3/27/20)

National Restaurant Association: “Restaurants get tax breaks, deferments from CARES Act”

• “Modifications for Net Operating Losses (NOL). This provides that a loss from 2018, 2019, or 2020 can be carried back five years, and temporarily removes the taxable income limitation to allow a NOL you incurred to fully offset income.” (National Resturant Federation, 4/1/20)