This year has been another one of challenges, and the impact has been felt across the country, particularly in the workforce. Several programs were put in place over the months to lessen the blow, but as we wrap up 2021, some relief is set to end.
Signed into law this March, the American Rescue Plan Act (“ARPA”) extended and expanded the payroll tax credits program for paid sick leave that was originally authorized under the Families First Coronavirus Response Act (“FFCRA”). The FFCRA required employers with fewer than 500 employees to provide paid sick leave to employees who missed work due to one or more qualifying reasons related to COVID-19. (The mandatory sick pay requirement expired on December 31, 2020.) Under the ARPA, covered employers are no longer required to grant COVID-19 related sick leave; however, if an employer chooses to offer paid sick leave (for qualifying reasons), it remains entitled to receive tax credits against the sick pay. The payroll tax credits program is scheduled to expire on September 30, 2021.
Separately, the CARES Act (as modified by the ARPA and the Taxpayer Certainty and Disaster Tax Relief Act of 2020) authorized an Employee Retention Credit (“ERC”) equal to 70% of the first $10,000 in qualified wages paid to each employee during the first two quarters of 2021 (up from 50% in 2020). To be eligible, an employer must fall within at least one of the following categories: (1) suffered a full or partial suspension of business operations due to a governmental order; (2) experienced a decline in gross receipts exceeding 50% during a 2020 or 2021 calendar quarter, as compared to the same quarter in the prior year; or (3) is defined as a “recovery startup business” (i.e., formed after February 15, 2020 and which satisfies certain other eligibility requirements). With the changes implemented by new guidance recently issued by the IRS, this program will now apply to wages paid or incurred only from March 13, 2020 through December 31, 2021.
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