U.S. Treasury Issues Updated FAQs for CARES Act Expenditures

(From the National League of Cities, as of 2020-12-03)

On November 25, the Treasury Department’s Office of Inspector General (OIG) issued an updated FAQ document. All changes from the previous document are highlighted in yellow.

The National League of Cities has helpfully outlined the most important changes to the FAQ as follows:

  • The most important part is
    Question 86, the recoupment of funds.

    • The OIG laid out two fact patterns of how it will deal with funds that were used in violation of this section of the CARES Act.
      • Before December 30, 2020
        • the prime recipient would need to either recover such funds and redeploy them for COVID-19 related expenditures or demonstrate that other eligible expenses incurred during the covered period of March 1 through December 30, 2020 would qualify as allowable. The prime recipient can dispute the determination of the OIG. Once Treasury OIG makes a final determination, it will request a written response from the prime recipient to include the corrective action(s) to remedy the noncompliance.
      • After December 30, 2020
        • the Treasury OIG may (1) seek recoupment of funds, or (2) allow the prime recipient to demonstrate that other eligible expenses incurred during the covered period of March 1 through December 30, 2020, would qualify as allowable.
        • Money that will be recouped will be done so through he the Treasury’s Bureau of Fiscal Services – Centralized Receivable Services.
        • A Prime Recipient will have the opportunity to enter into a repayment agreement. The Treasury Department’s Fiscal Services will follow the normal debt collection practices.
          • Note: Number one says “seek recoupment of funds” then it has a comma and a disjunctive, “or”, followed by a second stipulation that includes the term “prime recipients”, a term absent from the first stipulation. What is unclear from this reading is whether or not “seek recoupment of funds” applies to non-prime recipients. We are seeking clarification from the Treasury’s OIG on this point today.
  • Question 48 deals with payroll costs to individuals, and any other payments to individuals. This question answers how these payments should be categorized.
  • Question 49 deals with the non-federal cost share portion of covered CRF funds be reported for monies FEMA has determined to be eligible under the Stafford Act.
    • Note: In the example, it talks about prime recipients. Only 36 cities (those with more than 500,000 residents) in the U.S. were prime recipients.