President Trump signed the Consolidated Appropriations Act of 2021 into law on December 27, 2020. The enormous new law includes many separate parts, some of which have implications for employers. The highlights of the package include:
An extension of the payback period for payroll taxes that employers had the option to defer under the President’s Memorandum on August 8, 2020. Employers who took advantage of this deferral now have all of 2021 to collect and pay the deferred taxes.
Additional funding and an expansion and clarification of the Paycheck Protection Program (PPP).
Extension of the availability of paid leave and employer tax credits in the Families First Coronavirus Response Act (FFCRA). Compliance with FFCRA becomes voluntary from January 1, 2021, through March 31, 2021, but covered employers can continue to receive tax breaks for time off related to COVID-19 during those three months as long as they comply with the FFCRA. Emergency paid sick leave (EPSL) provisions likely afford only one bank of 80 hours of leave for the total period of April 1, 2020, through March 31, 2021. However, emergency family and medical leave (EFMLA) to care for a child whose school or place of care has closed may afford a fresh bank of hours, depending on the employer’s leave year under the federal Family and Medical Leave Act (FMLA). The initial caps on pay per day and total payments still apply. See our original article on the FFCRA.
Modifications to some funding and distribution rules of certain retirement plans.
Reintroduction of the tax deduction for the full amount of business meals for the years 2021 and 2022.
Modifications to health and dependent care flexible spending arrangements, including allowing some rollovers and some 2021 mid-year contribution changes.
Extension through 2025, of the CARES Act provision that allowed an employer to contribute up to $5,250 annually towards an employee’s student loans and not include those contributions in the employee’s income.
Tips: This Appropriations Act is a massive bill, and we've only highlighted a few of the provisions that we felt would be of greatest interest to a majority of businesses. Your tax adviser and benefits adviser are your best resources on items related to taxes and benefits. For questions about employment issues related to COVID-19, your Vigilant Law Group employment attorney is just a phone call away.