We want to make sure you know about the latest COVID-19
relief factors for your businesses.
For U.S. businesses with fewer than 500 employees, the Treasury Department, the Internal Revenue Service, and the Labor Department announced that these small and mid-sized employers could start taking advantage of two new refundable payroll tax credits. The credits are aimed at immediately reimbursing the employers, dollar for dollar, for the cost of providing coronavirus-related leave to their employees.
The Bill requires employers with 50 to 499 employees to provide 10 days of paid sick leave and 10 weeks of paid family leave for employees who are unable to work or telework because of coronavirus related absence beginning April 2, 2020. These payroll credits are equal to the required amount of the paid leave.
Employers can use the funds freed up from payroll tax credits to provide employees with paid leave. The funds can be used either for the employee’s own healthcare needs or to care for their families. The Coronavirus Payroll Tax Credit will kick in starting after April 1, 2020, and applies to leave taken between April 1, and December 31, 2020.
Note that leave taken on or before April 1, 2020, is not included in this Coronavirus Payroll Tax Credit ruling.
The relief was part of the Families First Coronavirus Response Act (FFCRA) that was signed into law last week.
How It Helps
The short answer on how this helps our country’s economy is this: The move increases liquidity for employers. It helps them respond to losses in revenue. And it helps your employees.
Further, for businesses with < 500 employees, canceling these taxes, when combined with the ability to get a refund for paid sick and family leave included as part of the FFCRA, will provide meaningful additional financial support. The law was enacted on March 18.
If you would like to read more on how the payroll tax credits work to keep the economy afloat, please refer to the United States Chamber of Commerce information.
Again, please call us if you have a question about the Payroll Tax Credits and how to access them. Be sure your payroll department is advised of this new ruling. And soldier on.
Disclaimer: This is the current information, and the global situation is changing daily. As new information is released, we will do our best to keep up with the most up- to-the- minute rulings. Please reach out to us if you are trying to make a decision today for your company and your employees.
Practicing since 1998, Michael decided to focus his practice on high net worth tax clients and closely held companies at LSL CPAs because of the complexity and multiple advisory needs. He not only provides tax planning and reporting, but he also consults on business strategic planning and has represented clients before tax authorities. He enjoys being available to clients for any business or personal financial questions.
You can reach Mike at 714-672-0022.
Read Mike’s complete bio.