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Weisberg Kainen Mark applauds all employers and business owners who are doing everything they can to retain employees and keep their companies afloat. To that end, we want to pass on some information on certain tax credits and benefits Congress has made available with recent laws.
Wages Paid for Emergency Sick Leave and Emergency Family and Medical Leave
As part of the Families First Coronavirus Response Act (FFCRA), which was passed on March 18, employers now have the option of granting new classifications of emergency sick leave to their employees – paid sick leave and family & medical leave. To encourage employers to use these classifications and, ultimately, prevent more COVID infections, you will be waived on the Social Security taxes (6.2 percent) that are normally taken out of your employees’ paychecks as part of FICA if you pay your employees under the new leave classifications.
The act gives credits to employers for the Medicare portion of FICA taken from wages (1.45 percent tax on employees’ paychecks); the employer side of FICA must still pay its share of Medicare taxes (also 1.45 percent of wages). Employers will also receive credits for their portion of Social Security taxes associated with emergency sick leave or emergency family and medical leave wages. The credits for Medicare taxes are dependent on your submitting Form 941, which you must do either monthly or semi-weekly.
CARES Act
About a week later, Congress passed the massive stimulus package known as the CARES Act. The key differentiator between these two laws as it relates to payroll is that any wages paid under the two leave classifications created under the FFCRA Act are not subject to the forgiveness provision offered through the CARES Act. This forgiveness provision marks certain costs incurred by employers as eligible to be, essentially, reimbursed by the federal government. These costs include interest on covered mortgage, rent, and utility obligations, as well as payroll costs.
To receive any benefits from the CARES Act as an employer, you must generally show that your business’s gross receipts have declined significantly compared to the same time period of last year. Additionally, your business must have been affected by a governmental order, such as Florida’s stay-at-home policy.
Conclusion
In the aftermath of these acts, the IRS released a guide on its website outlining some logistics of the laws’ tax-related provisions. Our firm encourages you to act quickly using these tax benefits and credits for your small or mid-sized business.
As always, Weisberg Kainen Mark is well-equipped to handle any disputes that may arise between you and the IRS, including disputes associated with COVID-related payroll tax issues. Get in touch with us by calling 305-374-5544.
Weisberg Kainen Mark, PL
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