By this point, many local businesses may have already taken advantage of some of the provisions of the $1.9 trillion American Rescue Plan Act (ARPA), which became law in March 2021. But if not, here are some things to make sure to look into and talk about with your company’s tax professional, accountant, attorney, banker or benefits adviser.
The paid leave tax credit
This credit, originally established as part of the Families First Coronavirus Response Act, has been extended through Sept. 30 by ARPA. While employers are no longer mandated to provide COVID-related paid leave for employees, they are encouraged to through this tax credit extension. “The advantage is if an employer wants to continue to be supportive of their employees having COVID-related issues, the extension allows them to get a 100% tax credit from the government for all of the reasons that they originally gave under the original act, plus an additional several reasons,” says Scott E. Atwood, chair of the labor and employment law group at Fort Myers–based law firm Henderson Franklin.
The additional reasons include giving employees paid time off to obtain a COVID-19 vaccine or recover from any vaccine side effects.
“I think it’s a great tool for employers to have in their toolbox,” says Damian C. Taylor, an attorney who specializes in labor and employment matters at Coleman Hazzard Taylor Klaus Doupé & Diaz in Naples. “If you’re an employer and you’ve got an employee who is challenged by becoming infected with COVID, or losing childcare because of COVID, and you otherwise would only be able to provide that employee with a limited amount of paid time off—if that’s an employee you value and want to retain, it’s nice to know that you have the option of providing them with that paid time off at no cost to you, because you can get the tax credits.”
The employee retention tax credit
Originally enacted through the 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act, this credit was extended from June 2021 until the end of the year by ARPA. Many businesses can qualify for this credit, which they can claim for 70% of qualified wages up to a $10,000 limit, for a maximum of $7,000 per employee per quarter.
“The employee retention tax credit is something a lot of people aren’t using, and it’s something for them to certainly talk to their tax professional or business adviser about as to whether or not they can do it,” says Atwood. “If you got a PPP loan, there’s good chance you might be able to get the retention credit, as well. If you’ve continued to keep your employees, it’s something to inquire into as to whether there may be some eligibility for it. It’s an often-overlooked area of tax credits.”
Through ARPA, the federal government is fully subsidizing up to six months of COBRA coverage for the period between April 1, 2021, and Sept. 30, 2021, for qualifying employees who have lost their employer-provided health insurance coverage due to involuntary termination or a reduction in hours.
What employers need to know about this is their responsibility to alert eligible employees about this option. “They have to provide notification to all of their assistance-eligible individuals (AEIs) of the availability of the subsidy,” says David J. Ledermann, an attorney at Henderson Franklin who specializes in employee benefits matters. “Those notices have to go to the AEIs who are employees, as well as their dependents who may be losing coverage and are also eligible.” Companies can find model notices on the U.S. Department of Labor’s website.
If an employee elects the subsidized coverage, the insurance company will bill the employer for the coverage, and the employer will get reimbursed by the federal government through a payroll tax credit. “They can claim a credit for the amount of the health care premium they paid for those AEIs,” says Ledermann.
Employers also have an additional notification requirement to alert these individuals about when their subsidized COBRA coverage will be ending.
Various funding opportunities
ARPA set aside an additional $7.25 billion for the Paycheck Protection Program and allocated $28.6 billion for a new Restaurant Revitalization Fund to provide grants for restaurants, bars, food trucks, caterers and other eligible businesses to use for things including payroll costs, mortgage and rent payments, utility payments, business supplies, food and beverage expenses and construction costs for outdoor seating.
ARPA also allocated additional funds for the Shuttered Venue Operators Grant program to support businesses such as live venue operators, theatrical producers and museum operators, and for Targeted Economic Injury Disaster Loan Advance payments.
By the time you’re reading this article, it’s unclear how much of this funding will still be available. “It sounds like a lot of money,” says Carol Dover, president and CEO of the Florida Restaurant and Lodging Association, about the Restaurant Revitalization Fund. “But it’s going to go quickly once people start applying for it.”
The U.S. Small Business Administration has a helpful landing page at sba.gov/coronavirusrelief with information about these programs, eligibility requirements and instructions about how to apply for any funding that remains available.
“In order for the economy to be stimulated, small business owners have to do their part and apply for these funds available for them,” says Mike Dal Lago, founder of Southwest Florida business and bankruptcy law firm Dal Lago Law. “So get out there and inquire— whether it’s through your accountant, your lawyer or your bank—to find out whether you qualify for these programs.”