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FFCRA & Payroll Tax Credit: How Does it Work?

The Families First Coronavirus Response Act (“FFCRA”) provides for refundable payroll tax credits for employers in order to assist with the cost of providing Coronavirus-related leave to their employees. These refundable payroll tax credits are designed to reimburse small and midsize employers for the cost of providing COVID-19-related leave to their employees. This tax credit goes into effect on April 1, 2020 and will remain in effect until December 31, 2020 unless extended or modified.

Who can utilize the tax credit? 

The refundable credits are available to any eligible employer. An eligible employer is a business or tax-exempt organization with fewer than 500 employees who is required to provide emergency paid leave under the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) or the Emergency Paid Sick Leave Act (“EPSLA”). Self-employed individuals also receive an equivalent credit.

What is the tax credit?

The FFCRA provides a refundable tax credit against the employer’s payroll tax deposit. The tax credits are equal to 100% of the amount an employer pays under the EFMLEA and the EPSLA up to a per employee cap.

Employers are limited to a refundable credit for wages paid pursuant to sick leave at two separate pay rates depending on the reason the person is unable to work. If the employee is unable to work because the employee has Coronavirus symptoms or is in a Coronavirus quarantine, whether a self-quarantine or not, the employer’s tax credit is capped at the employee’s regular pay rate, up to $511 per day, for up to 10 days, or $5,110 total aggregate per employee. If an employee is unable to work because the employee is caring for a family member with Coronavirus or caring for a child because of school or childcare facilities closing and the closing is related to COVID-19, the employer’s tax credit is capped at the employee’s regular pay rate, up to $200 per day, for up to 10 days, or $2,000 total aggregate per employee.

Example 1: An employee has Coronavirus symptoms and is seeking a medical diagnosis. The employee is a full-time employee with a pay rate of $30 per hour. The employee works 8 hours per day and is unable to work for 14 days. The employer would receive a tax credit of $2,400 (8 hours per day x $30 per hour x 10 days).

Example 2: Same situation as above, except the employee has a payrate of $40 per hour is unable to work because the employee must take care of a parent who has Coronavirus symptoms. In this example, the employer would receive a tax credit of $2,000 (10 days x $200 per day). The amount of credit is capped in this example because 2/3 of the employee’s regular rate of pay is more than $200 per day.

In addition to the refundable tax credits outlined above, the FFCRA also provides a refundable tax credit to employers for an employee who is unable to work because the employee must care for a child whose school or childcare facility is closed or whose childcare provider is unavailable due to the Coronavirus. In this situation, an employer may receive a refundable child care leave credit for up to 10 weeks of the employee’s qualifying leave. The refundable credit for child care leave is capped at the employee’s regular pay rate, or $200 per day, or $10,000 total aggregate per employee. Employers are also entitled to an additional credit based on the costs to maintain health insurance during the child care leave period.

How are the tax credits refundable?

All tax credits under FFCRA are refundable. That means if an employer’s payroll tax deposit is less than the total FFCRA tax credits, the employer would be eligible to file a request for an accelerated credit for the amount above the employer’s payroll tax deposit. The credit can be used to offset all federal income tax withholding from all employees (including those still working) and both the employer and employee portions of Social Security and Medicare taxes for all employees.

For example, an employer has $4,000 in total tax credits for all employees currently unable to work because of COVID-19. The employer prepares its payroll taxes and has a payroll tax deposit required of $3,000. The employer would use the entire $3,000 to pay the employees’ leave payments instead of depositing that amount with the IRS. The employer can then request the remaining $1,000 as an accelerated payment.

I am self-employed, how do I claim the credits?

A self-employed individual will claim these tax credits on his/her personal income tax return. The tax credits will reduce the individuals estimated tax payments.

For additional questions related to the FFCRA and Payroll Tax Credit, please contact BMD Tax Law Attorney Tracy Albanese at tlalbanese@bmdllc.com or (330) 253-9195.

Explosive Growth in Pot of Gold Opportunity for Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers

Our original article on bank lending to the cannabis industry anticipated that the convergence of interest between banks and the cannabis industry would draw more and larger banks to the industry. Banks were awash in liquidity with limited deployment options, while bankable cannabis businesses had rapidly growing needs for more and lower cost credit. Since then, the pot of gold opportunity for banks to lend into the cannabis industry has grown exponentially due to a combination of market constraints on equity causing a dramatic shift to debt and the ever-increasing capital needs of one of the country’s fastest growing industries. At the same time, hurdles to entry of new banks are being systematically cleared as the yellow brick road to the cannabis industry’s access to the financial markets is being paved, brick by brick, by the progressively increasing number and size of banks that are now entering the market.

2021 EEOC Charge Statistics: Retaliation & Impact of Remote Work

The U.S. Equal Employment Opportunity Commission (EEOC) released its detailed information on workplace discrimination charges it received in 2021. Unsurprisingly, for the second year in a row, the total number of charges decreased as COVID-19 either shut down workplaces or disconnected employees from each other. In 2021, the agency received a total of approximately 61,000 workplace discrimination charges - the fewest in 25 years by a wide margin. For reference, the agency received over 67,000 charges in 2020, and averaged almost 90,000 charges per year over the previous 10 years.

Ohio’s Managed Care Overhaul Delayed – New Implementation Timeline

At the direction of Governor Mike DeWine, the Ohio Department of Medicaid (ODM) launched the Medicaid Managed Care Procurement process in 2019. ODM’s stated vision for the procurement was to focus on people and not just the business of managed care. This is the first structural change to Ohio’s managed care system since the Centers for Medicare & Medicaid Services' (CMS) approval of Ohio’s Medicaid program in 2005. Initially, all of the new managed care programs were supposed to be implemented starting on July 1, 2022. However, ODM Director Maureen Corcoran recently confirmed that this date will be pushed back for several managed care-related programs.

Laboratory Specimen Collection Arrangements with Contract Hospitals - OIG Advisory Opinion 22-09

On April 28, 2022, the Department of Health and Human Services, Office of Inspector General (“OIG”) published an Advisory Opinion[1] in which it evaluated a proposed arrangement where a network of clinical laboratories (the “Requestor”) would compensate hospitals (each a “Contract Hospital”) for specimen collection, processing, and handling services (“Collection Services”) for laboratory tests furnished by the Requestor (the “Proposed Arrangement”). The OIG concluded that the Proposed Arrangement would generate prohibited remuneration under the federal Anti-Kickback Statute (“AKS”) if the requisite intent were present. This is due to both the possibility that the proposed per-patient-encounter fee would be used to induce or reward referrals to Requestor and the associated risk of improperly steering patients to Requestor.

Property Owner Protection from Tax Valuation Challenges

New legislation provides significant new protections for commercial property owners against challenges to valuation primarily by local school boards and prohibiting side agreements to avoid tax valuation changes. The Ohio Legislature has approved House Bill 126 which will go into effect July 2022 but will effectively apply to the 2023 tax valuation year.