Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Aïda Amer/Axios

Large companies have started pocketing billions of taxpayer dollars thanks to tax breaks tucked into the federal coronavirus stimulus.

Why it matters: Corporations are getting sizable, multiyear cash benefits, while most Americans received one-time, $1,200 checks to offset the economic turmoil and mass unemployment arising from the pandemic.

Details: Congress created several sizable tax provisions for companies in the main coronavirus aid package, especially these three:

  • Net operating loss carryback: Companies can take any operating losses they recorded in 2018, 2019 and 2020 and apply them to any of the previous five years to offset profits — in essence, they would be recouping taxes they already paid.
    • President Trump's tax cuts eliminated these so-called loss "carrybacks" as a way to pay for the slashed corporate tax rate.
  • Business interest expense deduction: The amount of interest that companies could deduct on tax forms previously was capped at 30% of adjusted profits, and Congress raised that limit to 50%.
    • This benefits companies that sit on a lot of debt, especially those backed by private equity firms, which often pile debt on.
  • Employee retention tax credit: Companies that continue to keep people employed during the pandemic get a 50% tax credit to subsidize their workers' wages, up to $5,000 per worker.

Together, companies will reap more than $155 billion from these three provisions this year and in 2021, according to estimates from the Joint Committee on Taxation.

  • These tax changes, especially the rules around net operating losses, are "incredibly impactful," said Chris Bell, a tax expert at accounting firm Moss Adams.

Between the lines: Those windfalls have started appearing in companies' first-quarter financial disclosures. The Wall Street Journal first reported some of the early gainers, and Axios has found others:

Transportation
  • Boeing registered an $862 million tax refund in the first quarter almost entirely due to the new operating loss carryback rule.
  • Airlines also recorded large tax refunds — $649 million for American, $50 million for Southwest and $47 million for Spirit — largely because they were able to carry losses backward.
Health care
  • Community Health Systems, a hospital chain that has struggled in recent years, pocketed a $183 million tax refund in the first quarter and registered a $0.15 per-share profit almost entirely because of these new tax changes.
  • Another hospital operator, Tenet Healthcare, registered $91 million in new tax benefits, mostly due to the higher interest expense deduction.
Retail
  • Business at restaurants, clothing stores and other retailers started coming to a standstill by the end of March, resulting in both large losses and large tax breaks.
  • Tax refunds totaled $163 million at Ross Stores, $60 million at Children's Place, $64 million at Dick's Sporting Goods and $20 million at Bloomin' Brands — a majority of which was due to loss carrybacks.

The big picture: The tax breaks were supposed to help ease companies' red ink and keep paychecks flowing for workers. But most of the companies mentioned above, for example, have either furloughed employees or are pushing for buyouts.

What to watch: The Congressional Budget Office "anticipates an increase in corporate tax refunds over the remainder of the year, resulting from the CARES Act's temporary modifications to the treatment of net operating losses."

Go deeper

Sep 25, 2020 - Health

Florida fully lifts coronavirus restrictions on restaurants

Photo: Don Juan Moore/Getty Images

Florida Gov. Ron DeSantis (R) announced Friday the state will completely reopen its economy, allowing restaurants to operate at full capacity and barring localities from ordering businesses to close.

Why it matters: The state became one of the world's epicenters for the virus in July, forcing DeSantis to pause its first round of reopening.

Updated 24 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: CDC director defends agency's response to pandemic — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden readies massive shifts in policy for his first days in office.
  3. Vaccine: Fauci: 100 million doses in 100 days is "absolutely" doable.
  4. Economy: Unemployment filings explode again.
  5. Tech: Kids' screen time sees a big increase.
  6. World: WHO team arrives in China to investigate pandemic origins.

Biden Cabinet confirmation schedule: When to watch hearings

Joe Biden and Kamala Harris on Jan. 16 in Wilmington, Delaware. Photo: Angela Weiss/AFP via Getty Images

The first hearings for President-elect Joe Biden's Cabinet nominations begin on Tuesday, with testimony from his picks to lead the departments of State, Homeland and Defense.

Why it matters: It's been a slow start for a process that usually takes place days or weeks earlier for incoming presidents. The first slate of nominees will appear on Tuesday before a Republican-controlled Senate, but that will change once the new Democratic senators-elect from Georgia are sworn in.