COVID-19 Employer and Tax Resources
Federal Workplace Safety Guidelines and Vaccine Mandate Rules
As employers address workplace safety issues related to COVID-19, the U.S. Equal Employment Opportunity Commission has guidance in the form of a Q&A to assist compliance with the Americans with Disabilities Act, the Rehabilitation Act, and other EEO laws as employees are returning to their workplace. Vaccination issues, including return to work rules are addressed near the end of the Q&A, in sections K and L.
- OSHA November 4, 2021 Emergency Temporary Standard (ETS) requiring employees to be vaccinated by January 4, 2021
- OSHA FAQ and Compliance Materials and Fact Sheets related to vaccine mandate
- Safer Federal Workforce Task Force FAQs on rules for federal contractors
- Issue brief from ACE on how federal contractor rules may apply to colleges and universties
Tax Credits and Deferrals
Employee Retention credit has been extended through July 1, 2021 and has been expanded to include a credit rate of 50 to 70 percent of qualifying wages paid to employees during the crisis, with a cap of $10,000 on qualifying wages, so employers may claim no more than $10,000 per employee for each quarter (up from $5,000 per employee, per year). The refundable credit is now available to both public and private institutions whose operations were fully or partially suspended due to a COVID-19-related shut-down order or whose gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. Employers who receive PPP loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds.
- IRS Notice 2021-23 implementing changes applicable to first two quarters of 2021
- IRS Notice 2021-20 updates FAQs and changes made by December 2020 Relief Act
- IRS FAQ explains the credit and how its calculated
- Form 7200 and instructions which can be submitted to receive an advance payment
Payroll Tax Credits for Paid Leave are available to private institutions with fewer than 500 employees to offset the cost of providing expanded paid sick and family leave wages required by the Families First Coronavirus Response Act to their employee for leave related to COVID-19.The related mandatory requirement for eligible employers to provide this leave has been removed. Employers that opt into continuing to offer the expanded leave may take the related credit through March 21,2021.
- IRS FAQ for the tax credits under the American Rescue Plan Act for leave after March 31, 2021.
- Department of Labor FAQ on the new paid leave requirements
- IRS overview of the COVID-19-related tax credits for paid leave
- IRS FAQ on the tax credits for paid leave
Deferral of FICA taxes. Institutions, public or private, may postpone payment of the employer’s share of FICA taxes that would be otherwise due on wages for the period beginning March 31 through December 31, 2020. The first half is due by December 31, 2021 and the remaining half is due by December 31, 2022. IRS Notice 2020-22 spells out penalty relief from payment of FICA and other employment taxes related to COVID-19-related provisions.
SBA Low-Interest Loans for Small Employers
The CARES Act established two loan programs to be available through the Small Business Administration (SBA) for employers, including private institutions with 500 or fewer employers. Part-time and student employees must be included in the institution's employee count, with the exception of students working as part of the Federal Work-Study program or a substantially similar state program. Borrowers may apply for both of the loans, however the loans must each be used to cover different costs.
Payroll Protection Program loans of up to a maximum of $10 million to help cover the cost of payroll, health care benefits, rent, utilities, rent, or payments of interest on mortgage or other debt obligations. The December 2020 stimulus package made an additional $284 billion available for PPP loans, and clarified that borrowers will be permitted to utilize tax deductions for normal business expenses even if the expenses were paid for using forgiven PPP loans.
The following resources are available from SBA:
- SBA consolidated interim final rule reflecting amendments to PPP made in American Rescue Plan Act
- SBA details, FAQs, and application information for Second Draw PPP Loans
- SBA interim final rule explaining revisions to loan amount calculations and eligibility
- SBA details, FAQs, and application information for First Draw PPP Loans
- PPP loan forgiveness terms and application information for First and Second Draw PPP Loans
- SBA interim final rule on forgiveness and review of PPP Loans
- Additional guidance on Affiliation Rules
Emergency Injury Disaster Loans (EIDL) provide up to $2 million of working capital to help offset loss of revenues. The interest rate for nonprofit organizations is 2.75%.
- The U.S. Chamber of Commerce’s Guide to SBA’s EIDL loans
- EIDL loan application
- EIDL loan advance application
Other Tax Relief
Flexibility on Carrying Over Cafeteria Plan Funds. Employers have discretion in 2021 and 2022 to adjust their cafeteria plans to help employees meet unforeseen consequences of the public health crisis. IRS Notice 2021-13 permits employers to amend their plans to help their employees utilize these programs without risking forfeiture of the amounts they set aside.
Relief for International Students. The IRS has extended tax relief for nonresident individuals including international students and scholars who are in the U.S. indefinitely as a result of COVID-19 travel disruptions. Visiting students and scholars will not run afoul of the substantial presence test and thus inadvertently be deemed permanent U.S. residents if they claim a COVID-19 medical condition exception which includes travel bans, government lockdowns, and canceled flights under the exception. The medical exception must be claimed on Form 8843, along with documentation. International students claiming treaty benefits will be presumed unable to leave the U.S. during the pandemic and will need to provide their withholding agent with Form 8233.
- IRS Rev. Proc. 2020-20
- Form 8843, for claiming the COVID-19 medical condition exemption
- Form 8233 for international students claiming treaty benefits.
Suspension of Limitations on Net Operating Losses. The 80 percent limitation on net operating losses that was enacted as part of TCJA has been suspended for 2018, 2019, and 2020, allowing deductions for loss carryovers and carrybacks to fully offset taxable income for those years. Institutions wishing to maximize NOLs should amend previously filed Forms 990-T accordingly.
- IRS Guidance on Net Operating Losses under the CARES Act
- IRS Guidance on Temporary Procedures to Claim Net Operating Losses Refunds (Digital Transmission of Forms via Fax Temporarily Permitted)
Expansion of Employer-Provided Tuition Benefits. An employer may now pay up to $5,250 annually toward an employee’s student loans, which would be excluded from the employee’s income. The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer under current law. The provision applies to any student loan payments made on behalf of an employee after between March 29 and December 31, 2020, as well as payments made in 2021.
Charitable Deduction for Nonitemizers. he above-the-line charitable deduction of $300 ($600 filing jointly) enacted as part of the CARES Act, was extended by the December 2020 stimulus package through 2021.Donors who itemize deductions are now able to give more cash gifts to charity before reaching their adjusted gross income limitation (AGI). Previously set at 60 percent, the limitation for cash contributions to certain public charities (including colleges and universities) has been increased to 100 percent of AGI. Donors giving more than 100 percent of AGI may carry those amounts forward and use them in the next five years.
Energy-Efficient Construction Deduction. The deduction for energy-efficient commercial construction under section 179D of the Internal Revenue Code was made permanent in the December 2020 stimulus package. Originally enacted in 2005 as a temporary measure, this provision has been extended several times.
IRS Coronavirus Resource Page. A collection of guidance and resources from the IRS is available on their resource page.
Director, Tax Policy
Vice President, Policy and Research