Impacts of the CAA, 2021 on Payroll

The Families First Coronavirus Relief Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act had profound effects on employers. 2021 brought additional legislation to know about. The Consolidated Appropriations Act of 2021 known as the CAA was signed into law months ago included several payroll-related items, including laws to extend and expand FFCRA and CARES Act provisions. Since many are still not yet aware of these provisions being updated, I am sharing this information to help you know what you must do if these situations apply to you. Below are a few ways in which your payroll may be impacted by these regulatory changes, according to Thomson Reuters.

Payroll Tax Deferral Extended

The amount of payroll tax deferred that had to be originally by April 30, 2021 has now been extended to December 31, 2021 under Section 274 of the Taxpayer Certainty and Disaster Tax Relief (TCDTR) section of CAA, 2021.  The document further clarified that no penalty fees or interest will be assessed for these amounts until January 1, 2022.

Employee Retention Credit Extended and Expanded

The Employee Retention Tax Credit (ERTC) have also been extended through December 31, 2021.  Additionally, the TCDTR increased the ERTC rate from 50% to 70% and lowered the amount of 2019 to 2020 gross receipt decline that was necessary for businesses to qualify. While this was previously set at 50%, the new percentage is only 20%, making many more companies eligible. Also included were an increase in the creditable wages per employee, which were previously $10,000 per year but are now $10,000 per quarter. It also removed the 30-day wage limitation.

Finally, it allows small businesses (those with fewer than 500 employees) to advance the credit in a quarter based on wages from the corresponding quarter of 2019 and extends eligibility to businesses that were not in operation for part of 2019.

PPP Loans

Paycheck Protection Loans also received some attention in the CAA, 2021, including guidelines for the second PPP loan draw, and confirmation that the second round of loans is forgivable under certain conditions.

If you have any questions regarding these provisions and how they may apply to your business, feel free to reach out to us at 310-534-5577 or contact@abandp.com.