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.
With millions of Californians out of work, on Wednesday, September 9, Gov. Gavin Newsom signed a law giving tax breaks to small businesses that hire employees over the next three months.
The incentive program will offer businesses of 100 employees or less a tax credit of $1,000 on their state tax bills for each new employee hired by December 1, 2020. The credit only applies to businesses that have lost at least 50% of their revenue from April to June 2020, compared to the same time period in 2019. The credit is capped at $100 million statewide, or $100,000 for each business. Businesses get the credit only if they hire employees; not contractors. Furthermore, small businesses that are owned by large companies are not eligible for the credit.
California’s economy has been devastated by the Coronavirus pandemic as the Newsom administration ordered many businesses to close for months to slow the spread of the virus. California lost 2.4 million jobs in April; more than all the jobs lost during the Great Recession a decade ago. The state has added back nearly a third of those jobs since then, but the unemployment rate is still 13.3% — higher than it ever got during the Great Recession. As of Tuesday, the state lists 33 of the state’s 58 counties as the most at risk for the Coronavirus, a designation that requires many businesses to halt indoor operations.
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 — sick leave and family leave.
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.
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. firstname.lastname@example.org
Paid Sick Leave for Workers
For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child-care leave when employee’s children’s schools are closed or child-care providers are unavailable. The Act will help the United States combat the financial strain employers are incurring as a result of the COVID-19 pandemic.
American businesses with fewer than 500 employees will receive funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. 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.
Paid Sick Leave for Workers
- For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child-care leave when employee’s children’s schools are closed or child-care providers are not available.
- Health insurance costs are also included in the credit.
- Employers face no payroll tax liability.
- Self-employed individuals receive an equivalent tax credit.
- Employers receive 100% reimbursement for paid leave pursuant to the Act.
- An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
- Where a refund is owed, the Internal Revenue Service (IRS) will send the refund as quickly as possible.
- Reimbursement will be quick and easy to obtain.
Small Business Protection
- Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or child care is unavailable in cases where the viability of the business is threatened.
- Requirements subject to 30-day non-enforcement period for good-faith compliance efforts.
To take advantage of the paid-leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek and expedited advance from the IRS by submitting a streamlined claim form that will be released later this week.
For more information
Visit Coronavirus Tax Relief for more information on these tax credits and COVID-19 relief.
As we continue to navigate through these challenging times, Walton is closely monitoring all developments associated with COVID-19 relief and keeping our clients and partners abreast of important updates, so be sure to stay tuned.
As always, should you have any questions, please feel free to contact us.
H.R. 6201 — Expected soon
The COVID-19 crisis has sparked an unprecedented response and action from Congress, urging lawmakers to work together and act swiftly to respond to economic crises looming over the country. As a result, Congress is expected to enact H.R. 6201 “Families First Coronavirus Response Act” as early as this week. Things are moving fast in Congress. Yesterday, at a lunch event, Senate Majority Leader Mitch McConnell (AL-R) said, “The Senate will not leave town until we have passed another bill to address this emergency. Continue reading “Legislative Update: Congressional Action to Covid-19”
The Senate Finance Committee voted the tax reform bill out of committee on Thursday, November 16 in a similar fashion to the House plan, suggesting an aligned strategy orchestrated by Republican leadership. All Democratic amendments were voted down by party-line votes. All Republican amendments were withdrawn in favor of the Chairman’s mark. As it turns out, the bill that was voted on does not reference WOTC. This likely means that WOTC will be left in place until December 31, 2019, based on the existing law.
While it seems that most of the Democratic amendments were an act of political showmanship, Senator Ben Cardin (D-MD) offered an amendment to extend or make permanent a series of tax credits. While the amendment was voted down, the conversation was interesting. First, many Republican senators had positive words for Mr. Cardin and expressed support for the basic principles of his amendment. Senator Hatch (R-UT) made a comment that they have a plan to do a “tax extender” bill and that it would be the better vehicle for the Cardin amendment. Several Republican senators referenced that there would be another opportunity at which point they would support the Cardin amendment, but they would not support it as part of the tax reform.
Automation Tax Credit Extended
North Dakota allows primary sector businesses to claim a tax credit against the purchase of machinery and equipment used in the automation of a manufacturing process. While this tax credit has been extended to the 2016 and 2017 tax years, the funding for the tax credit program has been redu Continue reading “North Dakota Extends and Amends Tax Credits”
On January 11, 2016, the solution for which many New Jersey businesses had been waiting finally arrived. Governor Christie signed the bipartisan P.L. 2015, c. 194 into law, permitting the voluntary conversion of outstanding Business Employment Incentive Program (BEIP) grant commitments into refundable tax credits.
Under the law, a business approved for a BEIP grant that chooses to pursue this opportunity has 180 days following enactment (by July 11, 2016) to direct the EDA to convert the grant to a refundable tax credit. The law also includes a structure that manages the fiscal effect on New Jersey in any one year, while also allowing for the issuance of tax credits to those companies that have been awaiting grant payments the longest. Credits will be made available for use beginning in Fiscal Year 2017.