Sneak Preview: Treasury Clarifies When CRF Costs Are Incurred
(The following was excerpted from a recent article in the Federal Grants Management Handbook.) Recipients of Coronavirus Relief Fund (CRF) payments should be aware that the Department of the Treasury, in recent guidance, has clarified its position as to when a CRF payment is “incurred” to address the possible time lapse between delivery of goods or services and date of payment. The document further lists examples of eligible and noneligible CRF expenditures.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) (Pub. L. 116-136) appropriated $150 billion to the CRF to make payments to states, tribal governments and qualifying units of local government to cover costs that: (1) are necessary expenditures incurred due to the public health emergency with respect to COVID-19; (2) were not accounted for in the budget most recently approved as of March 27, 2020; and (3) were, or will be, incurred between March 1, 2020, and Dec. 30, 2020. CRF payments may not be used for government revenue replacement, and may only be used if deemed by the recipient to be necessary expenditures incurred due to the COVID-19 public health emergency.
When discussing “costs that were not accounted for in the budget most recently approved as of March 27,” Treasury explains that such a cost is one that “cannot lawfully be funded using a line item, allotment or allocation within that budget, or it is for a substantially different use from any expected use of funds in such a line item, allotment or allocation.”
Treasury’s recent guidance updates initial CRF guidance issued on April 22 that explained that the cost of an expenditure is incurred when the recipient expends funds to cover the cost. The agency now notes that “upon further consideration and informed by an understanding of state, local and tribal government practices, Treasury is clarifying that for a cost to be considered to have been incurred, performance or delivery must occur during the covered period, but payment of funds need not be made during that time (though it is generally expected that this will take place within 90 days of a cost being incurred).” For example, Treasury notes that in the case of a lease of equipment or other property, irrespective of when payment occurs, the agency will consider the cost to be incurred for the period of the lease that is within the covered period, but not otherwise. In addition, it is necessary that performance or delivery of the goods or service take place during the covered period.
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