As we enter the final few months of 2020, a year marked with economic challenges and uncertainty due to the COVID-19 pandemic, several important deadlines are approaching as the calendar flips from 2020 to 2021.
An abundance of news continues to roll out from Washington regarding the battle to determine the best steps going forward. It is important for business owners to be nimble, ensuring they understand which programs are currently on the books, which deadlines have passed, and what legislation may come.
Two of the earliest pieces of legislation to be enacted during the pandemic this year were the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Families First Coronavirus Response Act (FFCRA).
The CARES Act included relief efforts such as the Paycheck Protection Program (PPP loans) and Economic Injury Disaster Loans (EIDL). While the process of implementing existing PPP applications is ongoing, the deadline for new PPP loan applications came and went in August. However, an update to the Paycheck Protection Program is expected to be included in upcoming legislation compromises.
The FFCRA stands in effect through December 31, 2020. It essentially requires certain businesses to provide paid sick leave or family leave for employees affected by COVID-19. Those effects range from being sick personally, to caring for a sick family member, or dealing with childcare because of pandemic-related closures. There is a tax credit provided to employers to balance that responsibility.
A more recent effort to lighten the burden on employees was President Trump’s payroll tax plan regarding Social Security.
In early August, the President issued an executive memorandum allowing employers to defer withholding certain payroll taxes, such as Social Security. That plan would stand for the months of September through December 31, 2020. The short-term effect of the deferrals was to get more money into employees’ pockets, but there are employers and accounting professionals who are wary of taking advantage of the options, at least until further clarification regarding forgiveness is provided by the IRS or through congressional legislation. Otherwise, those participating in the program may end up with a hefty sum to repay those withholdings down the road.
The largest impacts from Washington are likely to be the result of ongoing debates over further relief and any compromises that may arise.
The HEROES Act passed the House of Representatives in May — but was not taken up by the Senate in its original form. Senate Republicans introduced the HEALS Act, which was rejected by House Democrats. Senate Republicans then attempted to pass a “skinny” bill — but did not have the 60 votes needed to pass it. In the final week of September, House Democrats introduced a new, lighter version of the HEROES Act.
In addition to keeping tabs on any upcoming federal legislation, employers must also remain vigilant regarding COVID-19 relief efforts in their own state.
As with many other programs during this continually evolving economic landscape, education is essential for employees and employers to make the correct decisions for their own situations.
Franchisors and franchisees should be able to rely on their payroll professionals to guide them through the many programs and laws that affect their payroll, their HR needs, or their taxes. More payroll resources for your business can be found at www.payrollvault.com.
Sean Manning, CPA, CFE, is partner and CEO of Payroll Vault brands. Payroll Vault’s divisions include Payroll Vault Franchising LLC, the payroll service franchise business system, and Payroll Vault – Littleton, the corporate location an independent payroll service company. He is the former owner of Insperience Business Services, an accounting, tax, and business advisory firm located in Littleton, Colorado. For more information on International Franchise Association (IFA) supplier member Payroll Vault, click here.