The QTI Group Gives a COVID-19 Relief Update
On Saturday, August 8, 2020 the President signed four executive memorandums related to COVID-19 relief. There are media reports that all orders may be subject to constitutional challenge. Consequently, more time is needed to determine when and how these proposed Presidential relief actions will take effect.
We’ve had a few clients inquire about the memorandum and how it will impact them, so we decided to provide a summary of the two orders pertinent to businesses.
Federal Unemployment Benefits:
The “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019,” proposes an additional $400 in weekly federal unemployment benefits to replace the expired $600 a week benefit under the CARES Act. $300 of the $400 amount would be funded by the federal government while the individual states must fund the remaining $100 or seek a waiver if the state is not financially able to fund the $100.
Unlike the $600 benefit paid to employees receiving $1 in unemployment, states must confirm the individual is receiving at least $100 of underlying employment benefits before the employee would receive the $400.
Federal Payroll Tax Deferral:
The “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” directs the Secretary of the Treasury to implement a delay of certain employees’ obligations to pay Social Security taxes. The payroll tax provision requires guidance to be issued by the Department of Treasury. Until that guidance is issued, many of the details are unknown. Here is a summary of the key provisions of the memorandum:
- The memorandum applies to the period September 1, 2020, through December 31, 2020.
- It is unclear whether employers are required to take advantage of the delay.
- The memorandum does not address what an employer should do if they decide to continue withholding payroll taxes.
- The memorandum only applies to the 6.2 percent Social Security tax on employees.
- The memorandum only applies to employees generally earning less than $104,000 annually.
- The memorandum only provides a delay of the tax obligation, not forgiveness.
- No penalties or interest shall apply to those who use the delay.
- There is no relief with respect to employers’ withholding obligation.
It is important to keep in mind that Congress and the Trump Administration are still negotiating a potential COVID-19 relief measure. That compromise bill could supersede the President’s actions. As this situation becomes clearer, we will update you on what to expect and what possible actions to take.