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Legislative Update – July 29, 2020

Legislative Update – July 29,2020

New Stimulus Bill in the Works

Senate Republicans just unveiled the initial draft of a trillion dollar stimulus bill. While the bill will require negotiation with Senate Democrats and is expected to undergo significant modification, there are several components that are positive, particularly for employers. Therefore, we want to share what we know about the bill so far and give you an idea of where things seem to be headed.

New WOTC Target Group

The bill includes a newly created WOTC target group: 2020 Covid-19 Unemployment Recipients. This is defined as someone who was receiving unemployment insurance in the week they were hired or in the previous week. The time period for eligibility is from the enactment date of the bill until January 1, 2021. The credit amount is up to $5,000 per qualified individual (50% of the first $10,000 in wages paid). If approved in the final bill, this additional tax credit would be significant. As of June 18th, there were 20 million people, or about 15% of all wages paid in the US, in this group.

An All New Safe and Healthy Workplace Credit

The proposal bill also calls for the creation of a new tax credit called “The Safe and Healthy Workplace Credit.” The bill creates a temporary tax incentive through the end of 2020 to help businesses defray costs for testing, personal protective equipment (PPE), and reconfiguring workplaces. This would apply to every type of business; from storefront to manufacturing plants; offices to health-care facilities.

This program is designed to promote and enable our employers to take the federal and state recommended steps to prevent the spread of Covid-19 in their workplaces. This helps businesses afford these costs so they can bring back their employees quickly while alleviating the fears of spreading the virus. The refundable tax credit against payroll taxes is for costs incurred by the business for Covid-19 safety costs, such as testing, PPE, reconfiguring, and technology. The credit is limited to $1,000 per employee for the first 500 employees, $750 per employee for the next 500 employees, and $500 for each employee thereafter.

For example, a retail store with 40 workers seeks to resume providing jobs and services to its community โ€” the challenge is how to do so safely…

In order to reconfigure their store to help maintain social distancing, provide adequate sanitation stations, and implement other protocols to ensure their workers are safe at work, they spend $60,000. These dollars go toward PPE, screening/testing, disinfecting, and plexiglass shields. That company would receive a $30,000 tax credit against its federal payroll taxes. If that credit exceeds their payroll tax obligations, the company receives a refund from the Internal Revenue Service (IRS).

New Workplace Safety Screening Solution – coming soon!

We are delighted to inform you that the Walton team is collaborating with some of our partners to develop and launch new products geared to help businesses reopen safely and reduce the risks associated with exposure to the Coronavirus. Our solution will monitor temperatures and screen all employees daily prior to entry and deliver detailed contact-tracing intelligence to help companies track and minimize potential exposure risks. Stay tuned for more info…

What’s Next?

Negotiations will begin and continue through the first week of August, so we can expect to see a vote in the Senate by middle of August. As your trusted advisor, we will continue to keep you abreast of critical developments and changes as things progress.

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New Covid-19 Vaccine Tax Credit for Select Employers

On Wednesday, April 21, 2021, President Joe Biden announced a refundable tax credit available for select businesses that pay employees that need to take time off to get vaccinated for Covid-19. This is part of the administration’s effort to involve employers to promote vaccination.

“Today we hit 200 million shots,” Biden said. “It’s an incredible achievement for the nation. I’m calling on every employer, large and small, in every state, to give employees the time off they need with pay to get vaccinated,”
said the President.

Here are the details of the new tax credit:

  • The tax credit will apply to businesses with fewer than 500 employees.
  • The tax credit amount equals up to two weeks (80 hours), limited up to $511 per day for each employee and $5,110 in the aggregate at 100% of the employee’s pay rate.
  • Tax credit is available between April 1 and September 30, 2021.
  • Tax credit is refundable, meaning the employer is entitled to payment of the full amount of the credit if the tax credit amount exceeds the employer’s share of the Medicare tax.
  • Employers can claim the credit using IRS form 941 – Employer’s Quarterly Federal Tax Return.

This tax credit was authorized under The American Rescue Plan Act of 2021 (ARP) which was signed into law on March 11, 2021.

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Your manager has been trying to reach you, but you left 4 months ago because of disengagement

The Challenges of Managing a Remote Workforce

It’s hard to imagine that already a year has passed and the world is still dealing with a devastating pandemic. The disruptive effects the pandemic has had in the business world continues to take its course seemingly without end. One of the most impactful changes employers are facing is the future of the workplace as we know it, especially for businesses that have had to make the remote working experience a reality over the last year.

It used to be that working from home was not for everyone. However, despite the forced evolution, that remains the case. Nevertheless, even after the world recovers, we must all wonder about what the future of the workplace will look like. Much of the workforce has been forced to evolve rapidly and meet the moment by embracing a home-based work environment, full of its own set of challenges. Speaking of challenges, it’s also important to talk about the challenges (and opportunities) managers face when supervising remote employees. As if it isn’t enough to manage people altogether, now the remote work experience gets added to the fold for an even greater task.

To better explain the challenges, I’d like to share a true story that I recently learned about: An HR Representative from a global company gets a meeting request from [Bob] a manager she supports with a specific employee’s name in the subject line. Here’s a paraphrased script of their conversation:

HR Manager: Hi Bob, how can I help you?

Bob: Hi. It’s been weeks since I last heard from [Employee] Suzie. I’d like to solicit HR’s help at this point.

HR Manager: When was the last time you heard from her?

Bob: Oh, I can’t really remember… it’s been a few months. Unfortunately, I’ve been incredibly busy, but I’ve emailed Suzie several times and have not heard from her. I left her a voicemail message last week, but have not heard back. I am concerned.

HR Manager: Okay, here’s what I’d like to do. I’m going to overnight her a letter to check on her and inform her you have been trying to reach her and are concerned. I’ll ask her to contact us ASAP.

Several days later, the HR Rep and the employee finally connect and their interaction went something like this:

HR Manager: Hi Suzie. Is everything okay? Your manager has been trying to get a hold of you for the last few weeks and hasn’t heard from you, and we are concerned.

Suzie: Really? I left 4 months ago because I felt like the manager was disengaged. I figured someone would eventually reach out.

๐Ÿ˜€

This obviously is an extreme example, and we used a comic to add humor, but the reality is that this manager’s lack of engagement and oversight kept an employee who walked off the job on the company payroll, costing the company thousands of dollars in wages.

In conclusion, managing a remote workforce will be a new experience for many managers, but just as if they are managed onsite, a manager’s responsibility does not go away simply because the employee works from home. On the contrary, it is far more critical, especially when you consider other elements that may be competing for a remote employee’s attention and can negatively impact their work performance. Things such as sharing a home office with others, loud pets, crying kids, noisy neighborhoods, etc., all while trying to put on their best performance on video conferences throughout the day.

How is your company addressing this? Are you struggling to supervise your remote staff effectively?

There are several things that can and should be implemented to help managers address and overcome the challenges of supervising the fast-growing remote workforce, which include:

  1. Ask for help โ€” Reach out to your own manager or HR. Share your challenges and ask for support or additional training.
  2. Establish structure and rules of engagement โ€” Setup recurring 1:1 check-ins as frequently as needed and set expectations from the start. Make sure your employees know how to best reach you during the day.
  3. Provide multiple communication means โ€” Email is simply not enough. Use the phone and video conference more so. These will allow you to get additional context to how you communicate (gestures, tone, body language) which are super useful to eliminate miscommunication and misunderstandings altogether.
  4. Provide opportunities for social interaction โ€” Host trainings, feedback loops, virtual townhall meetings, and even happy hours. Promote activities that promote collaboration and avoid isolation.
  5. Offer encouragement and emotional support โ€” Ask open-ended questions: How are you doing? What’s new? How can I help you? These provoke open dialogue to help you assess situations with your employees. Don’t be afraid to ask follow-up questions and be sure to read between the lines.
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Legislative Update October 28, 2020

Will WOTC get renewed?

As we enter the elections and remaining part of Q4, many companies are wondering about the status of the Work Opportunity Tax Credit (WOTC) and its renewal. For those who may not know, the current WOTC program is set to expire on December 31, 2020, and unless congress passes legislation, the program will enter into a state of hiatus. Hiatuses are not uncommon for WOTC. In fact, since WOTC was created in 1996, it has had its share of hiatuses, which generally means that employers continue to screen and file the time-sensitive Form 8850 as usual, but certifications for employees hired after the program expired are not issued until the program in renewed. This leaves us with the question that most employers are wondering about: Will WOTC get renewed?

Possible New Target Group for WOTC

As is generally the case in an election year, legislation becomes more and more difficult as we approach the election. As we have seen, this proved to be true with the hopes for an additional stimulus bill. Everyone has been hopeful that a new economic stimulus bill would pass since there is a good chance the bill would include a new target group for WOTC centered around unemployment driven by the pandemic. With unemployment running very high, this could prove to be a significant group. There is also the possibility of expansion of other credits as well. However, as it turns out, the hope of a new stimulus bill appear to be stalled until after the election, at which point a great deal will depend on what happens in the election results.

Republicans have disagreed among themselves as to what should happen with the next round of stimulus. Senate Republicans wanted no more than $500B in additional aid. They felt there is no need for any additional stimulus. The administration, while somewhat inconsistent in their position, has argued for a much larger package, around $1.8 trillion. If they were successful in negotiating that package, which would probably have been the case with the administration package. Hence, the reason Senate Majority Leader Mitch McConnell (R-KY) was suggesting to the administration to postpone the stimulus bill until after the election.

3 Major Areas of Disagreement

Additionally, there have been disagreements between the administration and the Democrats. There are three major areas of disagreement.

  1. First is the size of the stimulus, with the Democrats wanting a much larger amount.
  2. Second is the issue of state and local aid because it might be perceived as bailing out poorly run cities.
  3. And the third issue relates to liability protections for businesses, with the Democrats opposed to such protections.

While the election will have a significant impact on what will happen with the stimulus bill, there are bills which will need to be passed in a lame-duck session. For instance, the current continuing resolution funding the government expires in early December; therefore, another CR of funding bill will need to be passed soon. As such, we continue to push and lobby for these bills to contain an extension of the expiring tax provisions, including WOTC.

Next Steps

In conclusion, the next steps on the stimulus bill are contingent on the election results.

  1. The first question is who wins the election. If Joe Biden wins, there will likely be pressure to avoid negotiating with the administration in a lame-duck session and just wait until the new administration assumes power. Hence, they would delay the stimulus until February. However, House Speaker Nancy Pelosi (D-CA) has expressed she would prefer not to wait; however, it is unclear if the bill could pass the senate.
  2. The second question is whether the Republicans maintain control of the senate. If the senate shifts to Democratic control, they will be able to control what bills will be brought to the floor. Therefore, there will likely be pressure to wait for February to enact more stimulus. Regardless of the outcome, we remain optimistic there will be an extension of the expiring provisions, including WOTC, and believe there is also a good chance the program will be expanded. Exactly how all that will unfold will depend on what happens November 3rd.

We hope you find this update useful. As your trusted advisor, Walton remains committed to driving lobbying efforts and keeping you abreast of important updates. As always, should you have any questions, please don’t hesitate to contact us.

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Update on Tax Reform and its potential effect on WOTC

On September 27, the Republicans revealed the framework of what they hope to accomplish with tax reform. Herein is a general overview of their plan and the impact we believe it can have on the Work Opportunity Tax Credit (WOTC). Considering the proposed reduction in the corporate tax rate from 35% to 20%, deductions and credits are not necessary to the same degree that they were in the past. Under the Republicans’ framework, two popular credits are explicitly referenced to be continued:

  • Research and Development credit
  • Low-Income Housing credit

The remaining credits, including WOTC, and other deductions are subject to review by the tax-writing committees, leaving their fate unclear at the present time. Continue reading “Update on Tax Reform and its potential effect on WOTC”

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hurricane disaster

Disaster Relief for Recent Hurricane Areas

On September 29th, President Trump signed into law H.R. 3823 โ€” Disaster Tax Relief and Airport Airway Extension Act of 2017 to aid individuals and businesses impacted by the recent hurricanes in Texas, Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. Section 503 of the Act provides relief to businesses in the form of a retention tax credit to employers if the employee’s place of employment was inoperable and located in disaster zones ending on December 31, 2017 and starting on the following dates:

  • August 23, 2017 (Hurricane Harvey)
  • September 4, 2017 (Hurricane Irma)
  • September 16, 2017 (Hurricane Maria)

Continue reading “Disaster Relief for Recent Hurricane Areas”

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28 day WOTC deadline with IRS form 8850

IRS Extends WOTC Form Filing Deadline

IRS Issues Notice to Extend WOTC Form Filing Deadline

On April 9, IRS issued Notice 2020-23 to provide relief relating to certain deadlines for taxpayers in response to the COVID-19 national emergency, declared in March of this year. Under the notice, a “time-sensitive act” due to be performed on or after April 1, 2020 and before July 15,2020 can be performed by July 15, 2020.

While WOTC and Form 8850 were not explicitly mentioned in the notice, the Notice explicitly includes as an “Affected Taxpayer” a person performing any of the time-sensitive acts identified in Revenue Procedure 2018-58, which provides an updated list of time-sensitive acts that may be postponed in the event of a federally-declared disaster, under Section 7508A. The list includes employers pursuing Work Opportunity Tax Credit (WOTC), which requires the filing of Form 8850 with a State Workforce Agency no later than 28 days from the employee’s start date. As a result, the filing deadline for 8850s due between April 1 and July 15 has been extended to July 15, 2020.

This is great news for employers that may have missed 8850 filings during this time period. This also demonstrates the overall strong support of the WOTC program. In the coming days, Walton’s team will work with employers impacted by this notice to take advantage of this great opportunity. In the meantime, if you have any questions, don’t hesitate to contact us.

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Tax credits and paid leave families first coronavirus response act

IRS Issues FAQs for Families First Coronavirus Response Act

On April 17, the Internal Revenue Service (IRS) posted new Frequently Asked Questions (FAQ) regarding COVID-19-related tax credits for required paid leave provided by small and midsize โ€” sick leave and family leave.

General Summary:

The Families First Coronavirus Response Act (“FFCRA”) signed by President Trump on March 18, 2020, provides small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick leave and family leave wages to their employees for leave related to COVID-19.

The FFCRA gives businesses with fewer than 500 employees (referred to throughout these FAQs as “Eligible Employers”) funds to provide employees with paid sick and family and medical leave for reasons related to COVID-19, either for the employee’s own health needs or to care for family members. Workers may receive up to 80 hours of paid sick leave for their own health needs or to care for others and up to an additional ten weeks of paid family leave to care for a child whose school or place of care is closed or child care provider is closed or unavailable due to COVID-19 precautions. The FFCRA covers the costs of this paid leave by providing small businesses with refundable tax credits. Certain self-employed individuals in similar circumstances are entitled to similar credits.

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The Cares Act Coronavirus Aid, Relief, and Economic Security text on sign man is holding

CARES Act – Signed into Law

CARES Act – Signed into Law

On Friday, March 27, President Donald Trump signed the “Coronavirus and Economic Security Act” (also known as the CARES Act) into law, after a voice-vote approval earlier that day by the U.S. House of Representatives and an unanimous vote by the U.S. Senate on Wednesday of last week. The CARES Act, estimated at $2.2T is the largest economic stimulus ever approved in the history of our country. The stimulus bill delivers extraordinary spending to confront the country’s disruption due to the COVID-19 pandemic, including cash payments to individual citizens, enhancements and expansions to unemployment benefits, a broad lending program for small businesses and targeted relief for hard-hit industries.

Here are some of the highlights:

Federal Loans and Grants for Businesses with Less Than 500 Employees

  • available for employers that maintained their staff between February 15 and June 30, 2020.
  • loan amount is 250% of average monthly payroll during that time frame, up to $10MM

Cash Assistance

  • Individuals earning less than $75,000 per year will receive $1,200 plus $500 per child.
  • Amount is prorated for individuals whose adjusted income in their most recent tax filing is over $75,000 and up to $99,000.
  • Individuals whose adjusted gross income is over $99,000 are excluded.

Unemployment Benefits

  • Individuals entitled to receive unemployment benefits would get an extra $600 per week for up to four months in addition to their state unemployment benefits, in an effort to make up for 100% of lost wages.
  • It also expands the maximum time limit from 26 weeks to 39 weeks.

Loans to Select Industries ($500 billion)

  • $58 billion in loans and grants for airlines
  • reprieve on their three major excise taxes (ticket price, fuel, and cargo tax)
  • $17 billion in loans and loan guarantees for businesses critical to maintaining national security
  • $454 billion for loan and loan guarantees for eligible businesses, states, and municipalities

Financial Aid to Hospitals

  • health care providers would receive grants for revenue lost by delaying elective surgeries and other procedures to focus on combatting the outbreak
  • 20% increase in Medicare payments for treating patients with COVID-19

In addition, the CARES Act includes a host of other benefits and relief programs designed to help our schools, the agriculture industry, distilleries, food stamps, and child-nutrition programs, the postal service, and the cruise industry; to name a few.

As your trusted advisor, Walton is committed to staying on top of important developments and communicating important information that may impact the companies we serve as well as our business partners.

As always, don’t hesitate to contact us should you have any questions.

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disaster relief credit opportunity text with images tornado, flood, hurricane, wildfire

IRS Publishes Details for 2018-2019 Disaster Relief

IRS Publishes Details for 2018-2019 Disaster Relief

The Internal Revenue Service (IRS) published information and instructions for companies to claim a special retention tax credit, available for businesses impacted by 29 identified natural disasters.

Disaster Relief Highlights

Businesses that retained employees during these disasters are entitled to claim a tax credit equivalent of up to $2,400 per eligible employee.

The identified disasters include Hurricane Michael & Harvey, Texas’ severe storms, as well as California’s wildfires; to name a few.

Disaster relief zones include counties within California, Texas, Florida, North Carolina, South Carolina, Georgia, Ohio, Oklahoma, Alabama, Mississippi, Indiana, and other states and U.S. Territories.

Let Walton help your company identify and maximize its benefit potential with ease. Contact us for more information: 1 (800) 221-0832. sales@waltonmgt.com

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