Employers: Take Note of the American Rescue Plan Act


On March 11, 2021, the US Bailout 2021 Act became law. This new law made many changes related to taxes that affected individuals and companies. If you are a business owner, be sure to note the following changes that apply to you.

State Cobra

If your business has a group health plan and is subject to federal COBRA rules or any state that requires you to provide ongoing health coverage to some individuals who encounter certain events, special rules apply from April 1, 2021 until September 30, 2021. During this period, you are required to pay premiums “per person” Qualification for help. ” This is an employee whose service has been involuntarily terminated (other than gross misconduct) or whose hours have been reduced (for example, changed from full time to part time) if they choose to continue coverage.

The good news is that the cost of these installments is covered by a refundable federal tax credit. Credit is offset for business taxes. Form 941 would be amended to allow this tax credit to operate.

You must provide affected individuals with various notices within specific time limits. The DOL has a notifications form You can use it for this.

The DOL offers frequently asked questions To assist you in the required procedures.

Paid Sick Leave and Paid Family Leave

In 2020, small employers are required to provide paid sick leave and paid family leave for employees who have been affected in various ways by COVID-19. Like Cobra, the cost of these benefits has been covered by employers’ tax credits. For the year 2021, paid sick leave and paid family leave are optional; Employers can choose to offer these benefits. Moreover, there are different rules from January 1, 2021 through March 31, 2021 and from April 1, 2021 until September 30, 2021 (the period in which such benefits for employees are funded through labor tax credits). Of course, employers may still offer paid sick leave and paid family leave, but tax credits on work stop on September 30, 2021 (unless Congress extends this rule).

The The IRS has guidelines Regarding the employer rules for the first part of 2021. Guidance on the rules in effect on April 1 has not yet been issued, but check tax authority Updateable.

Employee retention credit

In 2020, to incentivize employers to keep workers on payroll during the pandemic, another employment tax credit was created … the Employee Retention Trust. This credit has been extended until the end of 2021, allowing small businesses to benefit from paying workers’ wages, even if they are not working. Various rules apply to the first two quarters of 2021 and then the last two quarters of the year. The IRS Guidelines contain guidelines for rules for the first and second quarter of 2021. Check back with the IRS for guidance on the new rules for the third and fourth quarter of 2021. It will address these changes that allow a new class of eligible companies to claim credit (those that started on or after February 16, 2020); Companies in this category are limited to total credit of $ 50,000 per quarter.

Keep in mind that double diving is not permitted, so any wages taken into consideration for this tax credit may also not be used for employment opportunity credit, enabling zone employment credit, and some other appropriations, in addition to wages covered by PPP loans, Indoor operator grants, restaurant revitalization grants.

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Make sure to stay alert for more guidance as well as any additional tax changes affecting employers for 2021 and for years to come.

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