COVID-19: Employer Tax Credits and Grants

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

COVID-19: Employer Tax Credits and Grants

The public health crisis created by the COVID-19 pandemic is creating a number of challenges for employers.

My commitment to the cause focuses on ensuring my clients, as well as other Arizona employers, have the guidance they need to keep employees safe and the best possible opportunity to remain operational and profitable during this temporary situation.

Webinar – “Don’t Let Coronavirus Kill Your Business”

The first part of my commitment was delivered last week via a free webinar for employers titled “Don’t Let Coronavirus Kill Your Business” which explained the impact of the Families First Coronavirus Response Act for employers the day after it was passed.

Together with my good friend and trusted legal expert, Julie Pace of Gammage & Burnham, we focused primarily on employer rights under the new law, and offered valuable guidance using real life scenarios already occurring for many business owners.

Webinar Recording and Slides

If you missed last week’s valuable employer webinar you can click here for a free recording and/or to download the slides.

Employer-Paid Sick Leave Q&A

The second part of that commitment came yesterday when I worked to break down for employers the various paid sick leave laws and requirements under the new law, and answered many of the questions employers have relative to administering the new sick leave.

For a copy of yesterday’s employer Q&A, click here.

Employer Tax-Credits & Grants

Many employers are questioning what relief and support is going to be made available to relieve the financial burden associated with paid sick leave under the law.

At the time of writing this piece the Coronavirus economic stimulus package has not yet been passed. Julie and I will flush out developments for employers on that front in the coming days.

In the meantime I do want to share that as a component of the Families First Coronavirus Response Act, a series of refundable tax credits are available for employers providing paid emergency sick leave or paid FMLA. The credits are as follows:

1. A refundable tax credit for employers equal to 100 percent of qualified family leave wages required to be paid that are paid by an employer for each calendar quarter.

The tax credit is allowed against the tax imposed employer portion of Social Security taxes.

The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.

If the credit exceeds the employer’s total liability for Social Security taxes for all employees for any calendar quarter, the excess credit is refundable to the employer.

2. A refundable tax credit for employers equal to 100 percent of qualified paid sick leave wages that are paid by an employer for each calendar quarter.

The tax credit is allowed against the tax imposed by the employer portion of Social Security taxes (6.2% of wages).

3. One billion dollars in grants to states for emergency unemployment insurance, half of which would be transferred to the states within 60 days after the enactment of the bill (so long as the state complies with certain requirements, such as requiring employers to notify employees of the availability of unemployment compensation and permitting individuals to apply for unemployment compensation in at least two of the following ways: in-person, by phone, or online.

The remainder of the grant would be reserved for states in which the number of unemployment compensation claims has increased by at least 10% over the same quarter in the prior calendar year.

Have Questions?

Much of this is uncharted territory for all of us.

As members of the Arizona business community we share a common interest in the desire to keeping both our people and our economy healthy. That said, I invite all questions relative to the pandemic and its impact on your employees, your policies and your operations as we navigate this new area of the law. If I don’t have the immediate answer I will work to find it for you.

We will get through this, together. 602-903-4047 or email [email protected].