Under the newly passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act), additional payroll tax credits and tax payment deferrals are included to improve cash flow and employee retention.
Employers, including nonprofits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings, or who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis, may be eligible for a refundable payroll tax credit. The credit is equal to 50 percent of wages paid, after March 12,2019 and before January 1, 2021, to certain employees up to $10,000 per employee.
The credit is not available to employers receiving Small Business Interruption Loans under Section 1102 of this same Act.
For employers with less than 100 average full-time employees in 2019, all wages and health benefits are eligible except for wages taken into account for required paid sick leave and required paid family leave under the Families First Coronavirus Act (passed previously to encourage employers to pay sick pay and extend paid family and medical leave).
For employers with more than 100 average full-time employees in 2019, eligible wages include only employees who are furloughed or face reduced hours.
All employers may defer the employer portion of FICA payroll taxes through the end of 2020. These taxes would be due in two equal installments in 2021 and 2022. Deferral is not provided to employers that avail themselves of SBA 7(a) loans designated for payroll. Individuals who pay self employment taxes (presumably through quarterly estimates) may also defer half of their SECA tax liability for the same period of time.