As another year comes to a close, we recommend finding time to reflect on 2021…
The Senate appears on track to prevent a government shutdown on Thursday at midnight, as Democrats and Republicans wade through last-minute impediments to a stopgap funding bill’s speedy passage. Nancy Pelosi is using her power to get these pushed through; however, there are several ramifications on if and when these get passed and in what format.
The Bipartisan Infrastructure Bill (“Bill”), passed by the Senate, proposes to end the ERC program as of September 30, 2021. Since it doesn’t seem like the bill will be passed by the end of the month, where does this leave us? We are under the assumption that the current law passed having the ERTC through the end of the year is still in place, and until we have any notice to the contrary, we will continue to help our clients get the credits they are entitled to.
Last month, the IRS released Notice 2021-49 (“Notice”), which amplifies prior IRS guidance and sets forth ERC rules for the third and fourth calendar quarters of 2021, which are further discussed below:
- Applicable Employment Taxes for Claiming ERC. For tax year 2020 and the first two calendar quarters of 2021, eligible employers could claim credit against the employer’s share of Social Security tax, as adjusted for credits claimed under Sections 311(e) and (f) of the Internal Revenue Code (“Code”) and FFCRA (or the equivalent portion of Tier 1 tax under the RRTA). However, for the third and fourth quarters of 2021, eligible employers are entitled to claim the credit against the employer’s share of Medicare tax (or the equivalent portion of Tier 1 tax under the RRTA), as adjusted for credits claimed under Sections 3131 and 3132 of the Code. Any excess credits are refunded to the employer.
- Maximum Amount of ERC. For tax year 2020, the maximum amount of ERC that could be claimed per employee for all four quarters was 50% of the maximum amount of qualified wages or $10,000, resulting in a maximum available credit of $5,000 per employee for all calendar quarters. For the first two quarters of 2021, the ERC equals 70% of qualified wages per calendar quarter, resulting in a maximum of $7,000 credit per employee per calendar quarter. The same limits continue to apply to the third and fourth quarters of 2021. Thus, the maximum available credit in 2021 per employee for all calendar quarters is equal to $28,000. A separate credit limit applies to “recovery startup businesses” as discussed below.
In other news: On September 14, the Department of Labor (“DOL”), Internal Revenue Service (“IRS”), and Pension Benefit Guaranty Corporation (“PBGC”) issued a “Notice of proposed forms revision” and DOL issued a proposed rule relating to benefit plan reporting. The proposed rule largely focuses on changes to the Form 5500 to reflect statutory changes made by the SECURE Act. Here is the link to the proposed forms revision, and here is the link to the notice of proposed rulemaking.
For those of you worried about how the government plans to pay for all these new benefits they are rolling out in the latest legislation, here is a section-by-section breakout of what has been proposed, including a paid leave proposal that you should be aware that may come to pass. Furthermore, on September 13, Richard Neal, Chairman of the House Ways and Means Committee released his proposed “revenue raisers” for consideration during the mark-up of the reconciliation bill.
In COVID news, the director of the U.S. Centers for Disease Control and Prevention (CDC) has endorsed booster shots of the Pfizer-BioNTech vaccine for front-line workers. The U.S. Food and Drug Administration (FDA) amended the emergency use authorization (EUA) for the Pfizer-BioNTech COVID-19 Vaccine to allow for use of a single booster dose, to be administered at least six months after completion of the primary series in:
- individuals 65 years of age and older;
- individuals 18 through 64 years of age at high risk of severe COVID-19; and
- individuals 18 through 64 years of age whose frequent institutional or occupational exposure to SARS-CoV-2 puts them at high risk of serious complications of COVID-19 including severe COVID-19.
The spread of the Delta variant and declining rates of new vaccinations brings new urgency to the effort to increase vaccination rates.. An increasing number of organizations have been mandating that their workers get vaccinated, and many others are trying to decide whether to follow suit. Employers already stressed by too few employees to fill the jobs they have are fearful that large numbers of their workers will quit if they enforce a vaccine mandate. Furthermore, under the federal Fair Labor Standards Act, employers must pay nonexempt employees for the time spent undergoing testing during the workday.
President Joe Biden recently announced a series of proposals to combat the COVID-19 pandemic more aggressively, including plans for a new rule requiring employers with 100 or more employees to mandate that their workers be vaccinated or undergo weekly testing.
Federal employees—including remote workers—will need to be fully vaccinated against the coronavirus by November 22, according to recently released FAQs that address President Biden’s executive order. The Safer Federal Workforce Task Force released guidelines for how federal contractors are to protect their employees from COVID-19.
While the Occupational Safety and Health Administration (OSHA) has not yet released the emergency temporary standard (ETS) requiring private employers with 100 or more employees to mandate vaccination or weekly testing for their unvaccinated employees, covered employers should start preparations to comply now. Legal challenges to the ETS have been and will be made, but these requirements are not legislation, and President Biden has the authority to direct OSHA to release and enforce an ETS.
So far, the court challenges to the vaccine mandates have help up – mostly because the courts are throwing them out for various reasons. A health care employer in the Cincinnati area lawfully required its employees to get vaccinated or be fired, a federal district court judge ruled in one of the first decisions of its kind.