COVID-19 Update January 25, 2021

Evidently, whenever anything passes through Congress, the next step is for all appropriate government entities to give out their interpretations of the rules and how it will work. Of course, this is followed by non-government organizations putting out further interpretation in the forms of blogs, articles, webinars, and more. However, just like all other laws recently passed, the interpretation and the actual rules follow like pouring honey out of a bottle. Thus, much of our time here at Delta is spent doing our own research and attending all informative events.

Today, we sat through a few webinars to provide you with further insight on the Consolidated Appropriations Act (CAA) of 2021 that was passed in December. At the end of one webinar on Employee Retention Tax Credits (ERTC), the host stated, “if you are not confused yet, then you are not paying attention.” Although the IRS posted a new set of FAQ last Friday, there are still so many questions still to be answered. For instance, the ten pages of instructions about the term “Partial Suspension of Business due to COVID-19” are clear as mud. Other items left to interpretation include whether your eligibility is affected if your main vendor for your product gets shut down. The answers to these types of questions have been consistently “it depends.” Hopefully, your CPA or tax person is an expert at these interpretations.

We did gain some clarity on the wages that count towards tax credits. All social security wages paid through your company that have not already been used towards another federally funded program can be counted. In other words, you can’t use the same payroll dollars for both the PPP loan and the ERTC monies. Employer-paid health insurance premiums can also be counted for ERTC, even if the employees were not on the payroll and you decided to help them out by paying their medical insurance premium. There is a very long list that they recently added to including other federal funded credits that make these dollars only count toward one of these programs.

If you are wondering about your employee count towards these programs, the IRS FAQ says you can utilize the same rules as the ACA, or Obamacare. This means that the total amount of employees is calculated by adding full-time workers plus the sum of those who work under 30 hours/week and divide by 30 hours. On the other hand, the original directions provided a different equation. There seems to lack a consensus on the correct way, which is why CPA firms should be looking at numbers both ways to take the best advantage of the situation for your company.

For tax credits going back to 2020, we must file your new 941 tax forms on an amended tax form called a 941X. Lots of new rules around these forms to take full advantage of any ERTC tax credits for 2020. In 2021, there is a new form 7200 that allows companies to get an advance on any monies they qualify for in the ERTC rules recently passed. Delta must receive these forms from any client that is looking to take advantage, so make sure your 2021 taxes are filed properly.

President Joe Biden issued an executive order calling for increased protection of the safety and health of workers from COVID-19. The order requires the Occupational Safety and Health Administration (OSHA) to consider whether any emergency temporary standards on COVID-19, such as masks, are necessary. He also signed an executive order aiming to raise the minimum wage for federal workers. If you have any employees working remotely, please take a look at this SHRM article that reviews new guidance from the Department of Labor (DOL) on posting notices in hybrid workplaces.

Don’t forget to register for our next Dialed in with Delta one week from Thursday on 2/4 at 3pm, where we will review all of the changes so far with the new administration, as well as everything that pertains to the latest on PPP loans and ERTC opportunities to take advantage, especially in regard to how these tax credits will work in either a PEO relationship or an ASO relationship with Delta. We will also be taking a deeper dive into your FAQs, so we urge all to please send any additional questions beforehand. If you can’t make it, the recording will be posted to our website within 48 hours following the webinar.