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COVID-19 Update July 31, 2020

Wow, it’s hard to believe August is already here! The beginning of the year seemed to drag as we got through the initial part of the pandemic, but this summer has flown by.

The IRS has released new rules about the recapture of excess employment tax credits under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES). In addition, they proposed amendments to the issued regulations for businesses claiming certain credits.

While the FFCRA has been in place for a few months now, the bills currently being negotiated in Congress have a few additions to tax credits that may apply the same way as these are set out to do. FFCRA was put in place as the emergency sick pay and emergency FMLA leave law for all small to mid-sized employers through the end of the year. It allows for employees to get paid time off for COVID-19 related illness for themselves or immediate family. These payroll amounts can be credited on your federal taxes toward your 941’s. The clarification of these notices is for employers that have much more of this payroll than they can take credit for on their federal taxes. This new policy allows you to get a refund credit on these payrolls that are far above the credits allowable on your current payroll. Most of the language regards getting too much back and how you have to pay penalties and interest on the money that should have been paid to the IRS.

As a PEO, Delta is responsible for keeping clients’ 941 tax forms, and we see several issues with these new regulations. Determining the credits due on the new 941 forms is already challenging, so maintaining the new burden of these refunds towards future taxes may be problematic. Please reach out if you have questions about these new regulations, we understand they are confusing.

The U.S. Department of Labor (DOL) recently addressed questions about workers performing more nonexempt duties in updated pandemic guidance. During the COVID-19 public health emergency—as declared by a federal, state or local authority—employees who are exempt from the Fair Labor Standards Act’s (FLSA’s) overtime requirements under the executive, administrative and professional exemptions may temporarily perform nonexempt duties that are required by the emergency without losing their exempt status.

The SHRM also shared the four COVID-19 legal questions you should answer as you navigate implementing pandemic policies. We recommend you take a minute to read these tips from lawyers around the country, covering topics from telework expenses to handling school closures.

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