Payroll Tax

One of the first roll outs of relief was the Families First Coronavirus Responses Act (“FFCRA”) which included advance fefunding of the payroll credit required for paid sick leave. This allowed for an employer to claim refundable tax credits for emergency paid sick leave and emergency paid family leave required for employees due to the COVID-19 crisis. The CARES Act picked up where the FFCRA left off and provides for an expansion of provisions including the following:

Subject to limitations laid out in the FFCRA and calculated through the most recent payroll period in the quarter – the CARES Act provides for an advance of those payroll tax credits.

The CARES Act mandates the Secretary of the Treasury to create forms and instructions in accordance with these advancement credits.

The CARES Act also mandates the Secretary of the Treasury cancel penalties for failure to deposit payroll taxes (only if failure can be attributed to anticipated FFCRA credit).

Payroll Tax Deferral

The CARES Act grants employers and self-employed individuals the opportunity to hold off on payment of the 6.2% social security tax beginning when the CARES Act was enacted and ending at the end of 2020. However – these taxes would then become due across the next two years; 50% in 2021 and 50% in 2022.

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