The CARES Act, also known as the Coronavirus Aid, Relief, and Economic Security Act, is designed to encourage Eligible Employers to keep employees on their payroll, despite experiencing economic hardship related to COVID - 19, with a few options.
What is the Paycheck Protection Program?
Small Businesses with 500 or fewer employees are potentially eligible for loans to cover payroll and payroll related expenses for the coverage period of February 15, 2020 - June 30, 2020. These loans could potentially be forgiven if business uses this money to cover payroll and payroll related expenses only. This money is federally funded and administered by the U.S. Small Business Administration.
There is some specific information you will need to discuss when applying for these loans. Some questions to ask: when is the loan due to be paid back, if money was used for other purposes, and what happens if we furlough or lay off employees.
Learn more about Paycheck Protection Program at sba.gov.
What is the Social Security Tax Payment Delay?
An employers share of the social security tax can potentially be delayed. The Cares Act does NOT allow the Employer to not pay the employee’s portion of social security tax, medicare tax, employee’s federal taxes, and unemployment tax. The employer is still responsible for paying the employee’s portion of taxes. Employers payroll taxes normally due monthly for small businesses and biweekly for large businesses. This deferral is considered a loan and will need to be repaid over the coming 2 years. Half is due by December 31,2021 and remaining half by December 31, 2021. It is the employers responsibility to keep track of their loans and payment dates.
There are some considerations to keep in mind. CARES act requires economic hardship due to COVID-19. Businesses cannot double dip with Paycheck Protection Program, business must chose between paycheck protection program and social security tax payment delay. Finally businesses may offset employer tax credits owed for COVID-19 Paid Sick Leave and Paid Family leave against payroll taxes owed.
What is the Employee Retention Tax Credit?
The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Here are a few FAQs
to help you determine your eligibility during this time.
This credit is available immediately to enhance cash flow by offsetting employer’s social security payroll tax obligation. Does your business qualify for the Employee Retention Credit? There a few qualifiers to gain access to this credit; The employer’s business is fully or partially suspended by the government order due to COVID-19 and the employer’s gross receipts are below 50% of the comparable quarter in 2019. The credit stops when gross receipts rebound to 80%. This credit cannot be used by an employer with an SBA paycheck protection program loan.
We invite you to contact us for more details as each case is different. Our team of attorneys will help you understand what can be done and will be able to help you walk you throughout the process to get the justice you deserve.
Call our office today at 337-984-8020. Offices in Lafayette and Lake Charles.