Cash Relief Coming: Passed House & Awaiting Senate

Cash flow relief, for paying employees, is on the way!  My team and I are closely following this Bill and will definitely send you the final facts once the bill has been signed by the Senate.

 

So that you may plan for the week ahead, while we await the Senate returning to session to vote on the bill that passed the House, here is the latest version:

 

  • As an employer, if you need to pay your employees for sick leave, you would receive a tax credit against the Quarterly payroll taxes you pay.  Meaning, you would not receive a check for the wages right away; rather, you would receive a reduction of the payroll taxes you were supposed to pay for the Quarter
  • This tax credit will only cover wages paid to the employees for required coronavirus related sick leave.  In other words, the credit covers a portion of wages only if you had to pay the employee for this particular virus
  • Note that it is not yet known whether the Bill will make a distinction between whether the employee stayed home by choice or if you required the employee to stay home
  • The maximum tax credit is currently $7,156 per employee for the year
  • Hardship exemption: the tax credit covers employers with fewer than 500 employees and there will be exceptions, that have not yet been clarified, for small businesses that claim paying the employees is not possible because it creates an undue hardship on the employer.  Meaning, the House has left open the possibility that you will not be required to pay the employees, even though the tax credit will exist
  • April 15th deadline may be extended: we still expect this to occur; however, it is not a part of this Bill.  The administration is trying to determine it the decision requires the vote of Congress and, if extended, I expect it will be for a minimum of 3 months and you will not owe penalties or interest on any unpaid taxes paid after April 15th

Do you know your legal requirements as it relates to paying your employees for sick leave?  The rules vary by State and whether or not an employee is classified as an Exempt or Non-exempt employee.  I highly recommend reaching out to your HR Attorney to make sure you know the specifics for your business, in addition to reviewing your employee manual.

 

Another excellent resource is Bent Ericksen (an HR company that specializes in HR for dental offices) and they have written answers to the most popular questions: https://bentericksen.com/coronavirus-faqs/

 

As you know, my team and I have been working from our homes for years, which has positioned us to be able to continue preparing your tax returns, accounting, tax & transition services with no interruption. We already had the technology in place to continue working seamlessly without a brick and mortar office and we’re stocked up on soap and hand sanitizer!

 

We’re here for you as we all weather this situation and hope you and your family stay healthy,

 

Kate Willeford, CPA and the Willeford Group Team