As the circumstances surrounding the COVID-19 pandemic continue to evolve at a chaotic pace, NLBMDA is sending members a regular alert to provide updates on new actions taken by federal and state governments in response to COVID-19. These will include updates on state executive orders, federal guidance documents and Congressional activity. Members can find all of NLBMDA’s COVID-19 resources and communications by visiting our website
here
.
IRS Issues Guidance on Recapturing Excess Employment Tax Credits
The IRS has issued
guidance
through
temporary
and
proposed regulations
relating to the recapture of erroneously issued employment tax credit refunds under both the Families First Coronavirus Response Act (Families First Act) and Coronavirus Aid, Relief and Economic Security Act (CARES Act).
The IRS has revised or is in the process of revising the Form 941, Form 943, Form 944 and Form CT-1, so that employers may use these returns to claim the paid sick and family leave and employee retention credits.
Employers may also receive advance payment of the credits up to the total allowable amounts. The IRS has created
Form 7200
,
Advance Payment of Employer Credits Due To COVID-19
,
which employers may use to request an advance of the credits. Employers are required to reconcile any advance payments claimed on Form 7200 with total credits claimed and total taxes due on their employment tax returns.
Any refund of these credits paid to a taxpayer that exceeds the amount the taxpayer is allowed is an erroneous refund. The regulations released today authorize the assessment and collection of any erroneous refund of the credits in the normal course of processing the applicable employment tax returns or Forms 7200. This allows the IRS to efficiently recover any refund, while preserving administrative protections for taxpayers.
Senate HEALS Act Contains NLBMDA-Supported Priorities
On Tuesday, July 28, Senate Republicans released a package of bills that will serve as their “Phase 4” COVID-relief legislation and used as a starting point in their negotiations with the House on a final bill. Known as the “HEALS Act”, the bill includes several NLBMDA-backed priorities that were lobbied for over the last several months including employer liability protections, additional small business loan funding, 501(c)(6) PPP eligibility, reduced unemployment benefits, and business tax credits for personal protective equipment (PPE), COVID-19 testing and other employee protections.
Below is an overview of the legislation’s key provisions:
Employer Liability Protections
: The “SAFE TO WORK Act” creates temporary rules for COVID-specific claims which will help businesses and protect employers from liability under federal labor and employment laws for actions they take to follow COVID-related regulations and agency guidance.
The bill would:
- Help those essential businesses that have remained open to stay open, and help other businesses to reopen safely and without fear so that American workers can earn paychecks;
- Encourage and protect workers who return to their jobs by rewarding compliance with coronavirus-related public health guidelines;
- Provide uniformity and predictability for good actors; and
- Ensure that bad-faith actors are held accountable for coronavirus-related related injuries.
Unemployment Benefits
: NLBMDA lobbied Capitol Hill for a reduction of the additional $600 per week benefit to provide a better balance for employers and recipients. The HEALS Act reduces that payment to $200 per week through September. Starting in October, this payment would be replaced with a payment (up to $500) that, when combined with the state UI payment, would replace 70 percent of lost wages—either via a formula specified in the bill or by a state proposing an alternative method and receiving approval from the Secretary of Labor.
501(c)(6) PPP Eligibility
:
The Senate proposal includes the NLBMDA-backed priority of allowing 501(c)(6) organizations to apply for and receive forgivable Paycheck Protection Program (PPP) funds. The qualifying criteria is that the organization must have 300 or fewer employees and the lobbying activities of the organization do not comprise more than 10% of the total activities of the organization.
Paycheck Protection Program Extension
:
- Provides $190 billion in additional Paycheck Protection Program funding;
- Expands the uses for PPP funds to include covered operations expenditures, covered worker protection expenditures, covered supplier costs, and property damage costs;
- Caps the maximum loan at $2 million per recipient;
- Allows PPP recipients to select a covered 8-week period through December 31, 2020 to use the forgivable loan funds;
- Establishes a simplified forgiveness application process for PPP loans in two categories: under $150,000 and loans between $150,000 and $2 million;
- Clarifies that other employer-provided group insurance benefits are included in payroll costs for calculating forgiveness; and
- Allows struggling small businesses to receive a second PPP loan:
- To qualify, an eligible business must have 300 or fewer employees and demonstrate at least a 50% reduction in gross receipts in the first or second quarter of 2020 relative to the same quarter in 2019.
- In general, borrowers may receive a loan amount of to 2.5 times average total monthly payroll costs in the one year prior to the loan, up to $2 million.
- Borrowers of a Paycheck Protection Program Second Draw would be eligible for loan forgiveness equal to the sum of their payroll costs, covered mortgage, rent, utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred before January 1, 2021. The 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply.
Business Tax Credits
:
The proposal contains the following business tax-related provisions:
- Increases the employee retention credit from 50% to 65% of wages and increases the wage cap to $10,000 per employee each quarter (along with expanded eligibility);
- Creates a temporary new category of Work Opportunity Tax Credit (WOTC) of up to $5,000 for employers who hire unemployed workers.
- Creates a new refundable payroll tax credit equal to 50 percent of an employer’s qualified employee protection expenses, such as testing for COVID-19, protective personal equipment, cleaning supplies, qualified workplace reconfiguration expenses, including modifications to workspaces for the purpose of protecting employees and customers from the spread of COVID-19.
NLBMDA members are encouraged to weigh in on NLBMDA-backed priorities with their elected officials
here
.
Oppose Harmful Debt Collection Legislation
Lawmakers are continuing to consider legislation to address the ongoing COVID-19 pandemic and several NLBMDA-backed priorities have been or will be enacted. Unfortunately, a legislative initiative underway in the House and Senate could severely affect the way LBM dealers extend credit and conduct collections, effectively designating them as debt collectors.
The Small Business and Consumer Debt Collection Emergency Relief Act, recently introduced in the House and Senate (H.R. 6379/S. 3565), would negatively impact collections efforts for dealers across the U.S. NLBMDA appreciates efforts to address the pandemic and alleviate hardship for business and individuals. Unfortunately, this legislation does not accomplish that. Below are several problematic issues in the bill:
- The definition of “debt collector,” as currently drafted, is defined as “a creditor, and any person or entity that engages in the collection of debt”;
- Certain collection prohibitions, including business-to-business extension of credit;
- Interest or fees cannot be added to unpaid debts after the end of the COVID-19 pandemic;
- The legislation mandates communication in writing only and for informational purposes only.
NLBMDA is opposed to this legislation and has set up as
grassroots campaign
for members to contact their elected officials and express their opposition to this legislation.
NLBMDA Signs Letter to Congress on Employer Liability Protections
Last week, NLBMDA signed a
coalition letter
to Congress urging them to include employer liability protections from S. 4317, the "SAFE TO WORK Act,” in any final Phase 4 COVID-relief package. Provisions in the “SAFE WORK ACT” would protect against unfair lawsuits for businesses that work in good-faith to comply with applicable governmental health guidelines.
The “SAFE WORK ACT” was included in the Senate’s Phase 4 legislation released last week and NLBMDA continues to lobby Congress to include it in the final relief package currently under consideration.
COVID-19 Resources
Please note these updates do not constitute legal advice. Information contained may be subject to interpretation and companies should consult with their own counsel.
