by Laura Jorgensen, Senior Marketing Specialist, Business Software, Inc., and Alla Umanskiy, Senior Communications Specialist, Business Software, Inc.

Business operations nationwide have been disrupted by the COVID-19 (Coronavirus) outbreak and its widespread impact. To offset the economic fallout of the virus and provide businesses and workers with prompt financial relief, the federal government passed emergency legislation including two acts that contain legislative provisions which directly impact payroll and BSI’s TaxFactory and ComplianceFactory products. [1]

Additionally, both acts contain numerous substantive and technical changes to the Internal Revenue Code, designed to provide relief and more than $2 trillion in financial assistance to combat the economic consequences of COVID-19. The following sections explain the specifics of each act.

Families First Coronavirus Response Act (FFCRA)

The FFCRA, signed on March 18, 2020, requires eligible employers to pay sick or family leave wages to employees who are unable to work due to certain COVID-19 related circumstances. These employers are entitled to a refundable tax credit for the cost of providing the required paid leave, up to specified limits.

FFCRA: Individual Emergency Paid Sick Leave: When an employee is unable to work because the employee is quarantined (at the advice of a health care provider or pursuant to a federal, state, or local government order), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis, the employer pays up to two weeks (up to 80 hours) of individual emergency paid sick leave at 100% of the employee’s regular rate of pay (up to $511 daily and $5,110 total) based on the higher of the employee’s regular rate of pay or the applicable state or federal minimum wage.

FFCRA: Family Emergency Paid Sick Leave (Caring for a Child or Sick Family Member): If an employee is unable to work because of a bona fide need to care for a quarantined individual, or to care for a child (under 18) whose school or childcare provider is closed or unavailable for reasons related to COVID-19, the employer pays up to two weeks (up to 80 hours) of family emergency paid sick leave at two-thirds (2/3) of the employee’s regular rate of pay (up to $200 daily and $2,000 total) based on the higher of the employee’s regular rate of pay or the applicable state or federal minimum wage.

FFCRA: Emergency Expanded Family and Medical Leave: If an employee is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19, the employer pays up to an additional 10 weeks (up to 400 hours) of emergency expanded family and medical leave at two-thirds (2/3) of the employee’s regular rate of pay (up to $200 daily and $10,000 total) based on the higher of the employee’s regular rate of pay or the applicable state or federal minimum wage. To qualify, the employee must have been employed for at least 30 calendar days prior to the COVID-19 event. The first 10 days are unpaid.

Coronavirus Aid, Relief, and Economic Security (CARES) Act

The CARES Act, signed on March 27, 2020, creates a refundable “Employee Retention” credit for employers against the employer portion of the 6.2% Social Security tax on employee wages. The tax credit is equal to 50% of qualified wages (including allocable qualified health plan expenses) that the employer pays their employees after March 12, 2020 and before January 1, 2021. The maximum amount of qualified wages considered for each employee is $10,000, so that the maximum credit for an eligible employer is $5,000 per employee. The CARES Act also allows eligible employers to defer payment of the 6.2% employer portion of Social Security tax on employee wages from March 27, 2020 through December 31, 2020. Fifty percent of the payments will be due by December 2021 with the remaining amounts due December 31, 2022.

FFCRA, The CARES Act, and BSI Products

BSI solutions are always here to assist with your payroll tax needs. TaxFactory will support payroll tax changes for both acts using both new earnings codes and new tax types. ComplianceFactory will support the payroll tax changes for both acts using new tax types only. Please visit www.bsi.com for more information.

[1] BSI is a registered trademark of Business Software, Inc. TaxFactory and ComplianceFactory are trademarks of Business Software, Inc.

Authors

Alla Umanskiy is a professional writer with over 15 years of experience in corporate marketing and communications.  She has been published in numerous magazines and has judged various writing contests. She holds a Master’s Degree in Communications and a Bachelor’s Degree in Journalism.  Alla lives in the Atlanta area with her husband and two rambunctious daughters.

Laura Jorgensen is a Senior Marketing Specialist with more than 15 years of marketing experience in corporate and digital marketing, print media, and communications. She has been published and featured in local newspapers, national magazines, and online publications. She holds a Bachelor’s Degree in English from the University of Georgia. When not writing, she can be found volunteering at pet rescue facilities or walking her dog in the park.