The U.S. Treasury, IRS and Department of Labor announced Sunday that small and midsize employers can begin taking advantage of two new refundable payroll tax credits.
The credits are designed to immediately and fully reimburse business owners for the cost of providing COVID-19-related leave to their employees. This relief falls under the Families First Coronavirus Response Act signed March 18 by President Donald Trump. Health insurance costs are also included in the credits.
The act will give all American businesses with fewer than 500 employees funds to provide employees with paid leave to take care of their own health needs or those of family members.
Wendell Pryor, Chaffee County Economic Development Corp. director, said any support from state and federal governments is always helpful to the local economy at this time.
Pryor said because the situation is constantly evolving, it is too early to begin assessing potential future ramifications of these credits. As of now, they are trying to assess which local businesses would even be interested in accepting them.
He said the corporation is in discussions with Chaffee County to establish an economic recovery task force.
A press release on the IRS website said, “The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.”
For COVID-19 related reasons, employees can receive up to 80 hours, or two full work weeks, of paid sick leave. Eligible employers may receive a refundable sick leave credit at an employee’s regular pay rate, up to $511 daily and $5,110 for 10 days total.
An employee who cannot work in order to care for a quarantined individual or a child can receive up to two weeks or 80 hours of paid sick leave at two-thirds of their pay. For employees caring for someone else, eligible employers can claim a credit for two-thirds of their regular rate of pay, up to $200 daily and $2,000 for 10 days total.
In some cases, employees in this situation may receive up to an additional 10 weeks of paid leave. If the period is expanded to that, employers can receive a refundable child care leave credit equal to two-thirds of the employee’s regular pay, up to $200 daily or $10,000 up to 10 weeks.
Employers are also entitled to an additional tax credit based on health insurance costs during the leave period.
Businesses with less than 50 employees are eligible to be exempt from providing paid child care leave if the viability of the business is threatened.
Eligible employers will be able to claim credits based on qualifying leave they provide between the effective date and Dec. 31. Equivalent credits are available to those self-employed in similar circumstances.
When employers pay their employees, they must withhold federal income, Social Security and Medicare taxes from their paychecks. Employers are required to deposit these taxes with the IRS as well as file quarterly payroll tax returns.
Employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to what they paid rather than deposit them with the IRS.
If there are not sufficient payroll taxes to cover the costs of qualified sick and child care leave, employers can file a request for an accelerated IRS payment. The IRS expects to process requests in two weeks or less. Details of the new, expedited procedure will be announced soon.
The Labor Department will issue a temporary non-enforcement policy to provide employers time to comply with the act. The department will focus on compliance assistance during the 30-day period.
More information about credits and other relief can be found under Coronavirus Tax Relief on IRS.gov.
From our sister paper The Mountain Mail at www.themountainmail.com