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Treasury Update Regarding Guidelines on Use of CARES Act Funds

December 15, 2021


On December 14, 2021, Treasury issued an important update to its guidance on use of ‎CARES Act funds. Currently, there is a deadline of December 31, 2021 to spend CARES Act ‎funds on eligible expenses. While Congress is considering legislation that would extend that ‎deadline to December 31, 2022, there is no assurance that legislation will pass. The new ‎Treasury guidance provides an opportunity for Alaska Native Corporations and Tribes to ‎obligate funds in 2021 for services, goods, and property that will not be delivered until 2022. ‎

The CARES Act provides that payments from CARES Act funds may only be used to ‎cover costs that were incurred during the period that begins on March 1, 2020 and ends on ‎December 31, 2021. Treasury previously interpreted this to mean performance or delivery of ‎services or goods paid for using CARES Act funds had to occur by December 31, 2021. ‎

Treasury has now adopted a new approach and interpretation of the CARES Act, in ‎recognition of the delay in providing CARES Act funds to Alaska Native Corporations and ‎supply-chain issues. The new Treasury guidance now defines “incurred” as follows:‎

a cost associated with a necessary expenditure incurred due to the ‎public health emergency shall be considered to have been incurred ‎by December 31, 2021, if the recipient has incurred an ‎obligation with respect to such cost by December 31, 2021. ‎‎(Emphasis added)‎

Treasury’s new guidance also now defines “incurr[ing] an obligation” as “an order placed for ‎property and services and entry into contracts, subawards, and similar transactions that require ‎payment.” ‎

This is a significant change, and Treasury has also revised prior Treasury FAQs on the ‎use of CARES Act funds to buy property and equipment. The prior FAQ on use of CARES Act ‎funds on goods and services and leases of real property and equipment stated: ‎

‎[A]cquisitions and improvements [of goods and services and ‎leases of real property and equipment] must be completed and the ‎acquired or improved property or acquisition of equipment be put ‎to use in service of the COVID–19-related use for which it was ‎acquired or improved by December 30.‎

Treasury has now revised this FAQ to state:

Payments from the Fund may only be used to cover costs that ‎were incurred during the period that begins on March 1, 2020, and ‎ends on December 31, 2021. Regarding this requirement, please ‎see the discussion of the interpretation of “incurred” under the ‎heading “Costs incurred during the period that begins on March 1, ‎‎2020, and ends on December 31, 2021.”‎

Accordingly, the new guidance and revised FAQs now provide that an Alaska Native ‎Corporation and Tribe can use CARES Act funds for property and services that will not be ‎delivered or performed until 2022, so long as the contract obligating the CARES Act funds is ‎signed before December 31, 2021. The funds must ultimately be expended (i.e. paid out) no ‎later than September 30, 2022 for obligations that were incurred prior to December 31, 2022. ‎

This is an important update by Treasury and Alaska Native Corporations, and Tribes ‎should carefully consider how they can use this new guidance in connection with their CARES ‎Act funds. We will continue to monitor developments in this area. ‎

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

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