On July 27, Senate Republicans released a series of COVID-19 relief bills, including the “American Workers, Families, and Employers Assistance Act” (the “Bill”).  The Bill is a successor to several provisions in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, passed in March of this year, which attempted to blunt the early effects of the COVID-19 pandemic.

Section 213 of the Bill would create a new “safe and healthy workplace tax credit,” which would provide a refundable payroll tax credit equal to 50% of an employer’s “qualified employee protection expenses,” such as COVID-19 tests, protective personal equipment, and cleaning supplies.  The new tax credit would also cover “qualified workplace reconfiguration expenses,” including workspace modifications to protect employees and customers from the spread of COVID-19, and “qualified workplace technology expenses,” including technologies designed to reduce contact between employees and customers that were acquired by the employer on or after March 13, 2020, and were not acquired pursuant to a plan in existence before that date.

“Qualified workplace reconfiguration expenses” must be incurred for reconfigurations, the plans for which were not in place before March 12, 2020, with respect to tangible property described in section 168 of the Code that is owned or leased by the employer.  Both “qualified workplace reconfiguration expenses” and “qualified workplace technology expenses” must have a primary purpose of preventing the spread of COVID-19 to qualify for the credit and must be commensurate with the risks faced by employees or customers or be consistent with recommendations made by the CDC or OSHA.

The aggregate amount of the total credit each quarter for “qualified employee protection expenses,” “qualified workplace reconfiguration expenses,” and “qualified workplace technology expenses” incurred during the quarter would be limited to $1,000 per employee for each of a taxpayer’s first 500 employees, $750 for each additional employee up to 1000 employees, and $500 for each additional employee after the first 1000 employees.  The credit would be available to both employers and self-employed individuals, including sole proprietors, independent contracts, and farmers.  Self-employed individuals would be treated as employers with a single employee under the Bill.

The credit would apply to amounts paid or incurred for qualified expenses after March 12, 2020, and before January 1, 2021.

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Photo of Joseph Sullivan Joseph Sullivan

Joe Sullivan is an associate in the firm’s Washington office and a member of the Tax Practice Group.

Photo of S. Michael Chittenden S. Michael Chittenden

Michael Chittenden practices in the areas of tax and employee benefits with a focus on the Foreign Account Tax Compliance Act (FATCA), information reporting (e.g., Forms 1095, 1096, 1098, 1099, W-2, 1042, and 1042-S) and withholding, payroll taxes, and fringe benefits. Mr. Chittenden…

Michael Chittenden practices in the areas of tax and employee benefits with a focus on the Foreign Account Tax Compliance Act (FATCA), information reporting (e.g., Forms 1095, 1096, 1098, 1099, W-2, 1042, and 1042-S) and withholding, payroll taxes, and fringe benefits. Mr. Chittenden advises companies on their obligations under FATCA and assists in the development of comprehensive FATCA and Chapter 3 (nonresident alien reporting and withholding) compliance programs.

Mr. Chittenden advises large employers on their employment tax obligations, including the special FICA and FUTA rules for nonqualified deferred compensation, the successor employer rules, the voluntary correction of employment tax mistakes, and the abatement of late deposit and information reporting penalties. In addition, he has also advised large insurance companies and employers on the Affordable Care Act reporting requirements in Sections 6055 and 6056, and advised clients on the application of section 6050W (Form 1099-K reporting), including its application to third-party payment networks.

Mr. Chittenden counsels clients on mobile workforce issues including state income tax withholding for mobile employees and expatriate and inpatriate taxation and reporting.

Mr. Chittenden is a frequent commentator on information withholding, payroll taxes, and fringe benefits and regularly gives presentations on the compliance burdens for companies.