Time Data Systems – May 2021 Newsletter
The American Rescue Plan Extends
A key crisis-era tax credit that could get you some serious cash… But you have to act!
Make sure your company is getting all the assistance available from government programs. This means assuring that you’ve utilized the Employee Retention Credit (ERC) – the refundable tax credit that makes it easier for businesses to keep employees on the payroll. The credit has been extended as part of the American Rescue Plan Act; the $1.9 trillion relief package just signed by President Biden. The ERC originally scheduled to end on June 30 will continue through year end, giving business owners access to as much as $33,000 per employee in incentives.
How the credit works, depends on the time frame:
First half of 2021
Eligible employers can claim a refundable credit against the employer share of Social Security tax equal to 70 percent of a full-time employee’s qualified wages paid–including certain health plan expenses–from January 1 through June 30, 2021. The maximum ERC amount available is $7,000 per employee per quarter or $14,000 for eligible wages paid in the first half of 2021.
That component is available to companies that experienced a full or partial suspension of operations as a result of government mandates, or those that can show at least a 20 percent reduction in quarterly gross receipts in 2021, compared with the same quarter in 2019.
Second-half of 2021
The new law allows businesses to claim the refundable credit against the employer share of employment taxes (including Medicare), equal to as much as $7,000 per full-time employee per quarter during the last half of the year. So, including the existing provisions, business owners this year would qualify for up to $28,000 per employee.
The same eligibility rules apply in the last two quarters of 2021: Your company must have experienced a full or partial shutdown or at least a 20 percent drop in quarterly gross receipts in 2021.
Full year, 2020
Employers can also qualify for a look-back to 2020 to access an additional credit per full-time employee. The measure was authorized under the Consolidated Appropriations Act (CAA), which also allowed ERC recipients to apply for a Paycheck Protection Program loan, although employers can’t claim the ERC on expenses paid with forgiven PPP funds.
To access the 2020 credit, which spans March 12, 2020 through January 1, 2021, eligible companies must show a more than 50 percent decline in quarterly gross receipts, compared with the same quarter in 2019. The credit is 50 percent of qualified wages paid, up to $10,000 per employee in 2020. The maximum credit available is $5,000 per employee.
How to file for the benefit
PPP recipients can file amended tax returns to claim the ERC for 2020 and/or claim an ERC in their 2021 tax filing. Also, unlike the PPP, which is designed for small businesses, a company’s head count doesn’t affect eligibility for the credit.
This article simplifies a complex Act as understood by Time Data Systems, Inc. It is not to be taken as legal advice or tax advice. For more information about the Employee Retention Credit please refer to the Internal Revenue Service here and here on the IRS website.
We Have Just Launched A Brand-New Website
After working on it for several months, we are excited to announce that we have just launched a brand-new website! The new website contains a wealth of information about the various solutions we offer, contains industry-specific ways to simplify workforce management, and it provides a ‘Resources’ section where you can read our newsletters, whitepapers, and view and download our product flyers. In the ‘Company’ area you can learn more about us and the management team, and you can read client success stories. We also made it easy to find out about the various types of support we offer, and we provided a simple way to submit a support request.
Go ahead and check out the new website and let us know what you think!
“Tap for Pay” Offers Numerous Proven Benefits to Both Employer and Employee
The past 13 months have been challenging for both businesses and the employees that worked for them. Companies had to close their doors for an undetermined amount of time, then later re-open under new health safety requirements and with many of their employees not returning to their previous jobs for one reason or another. Those working in certain industries – like hospitality and restaurants – were hit especially hard, sometimes not being able to return to their jobs for several months (if the business even financially survived through the pandemic).
Layoffs happened during the time when only companies deemed ‘essential’ were open, making it nearly impossible to find a different job. Now, with COVID vaccinations underway, there is renewed hope that companies can soon move closer to the way they were operating in February 2020. We believe it also means organizations in all industries should be preparing now to attract and retain the best employees, as they will be important agents in reviving our economy.
On-demand pay, or “tap for pay”, is a more recent entry into the world of employee benefits, but it has quickly gotten the attention of both workforces and employers. There’s no better time than now to begin offering it at your company, especially since the post-COVID pandemic era is almost here, and those looking for work or considering their current situation will be carefully evaluating how your organization differs from other prospective employers.
Being able to clock out from a shift and be paid immediately for the hours worked can help employees who are having a tight but temporary cash flow issue. Being aware of and offering this innovative employee benefit shows that you care about your workforce and their needs. And because Pay on Demand is managed by a third-party provider, your company doesn’t need to front any of the money or remember to deduct any advances from the employee’s next paycheck. There is no fee charged to the employer or employee for accessing these wages. Current subscribers of Time Data Systems’ Attendance on Demand can simply add Pay on Demand to their already in-use workforce management solution.
Pay on Demand fits right into your existing processes:
- Employees simply switch their direct deposit account to the third-party provider (FDIC-insured MetaBank®).
- At the end of each worked shift, on-demand wage advances are offered to your workforce.
- Any requested wage advances are transferred to the employee’s “tap for pay” account and are able to be used immediately with the included, no-fee Debit Mastercard® which is linked to a no-fee digital bank account.
- The employee’s next paycheck will reflect a deduction in the amount advanced.
Wage advances made through Pay on Demand are not charged a fee. Other benefits to your workforce include:
- Wage advances help your employees by providing them with greater liquidity, lower financial stress, and an alternative to payday lenders that impose high fees and interest rates.
- Underbanked or unbanked employees will benefit greatly from the convenience and security of no-fee digital bank accounts (both savings and checking) and the Pay on Demand debit card issued through MetaBank®, our FDIC-insured banking partner.
- “Tap for pay” allows employees to pay for unexpected or emergency expenses, or ease temporary money woes, without any fees and without needing the services of predatory, high-interest payday lenders.
Pay on Demand is becoming more popular with employees, and offering instant wage disbursement helps you attract and keep employees. Instant payment for hours worked requires no changes to your payroll and is simple to set up. Your organization doesn’t need to front any of the funds, the app manages the advances and collections, and Pay on Demand is free for both you and your workforce.
Companies that offer on-demand pay experience increased work productivity.
- 86% of employee users showed improved job performance
- 34% reduction in absenteeism among users
Pay on Demand brings savings in hiring, training, and recruitment (especially for seasonal and part-time positions).
- 40% reduction in employee turnover
- 200% increase in job applicants
- 52% reduction in the time it takes to fill positions
You have questions, we have solutions. Please give us a call to add Pay on Demand, or to learn more about how our Attendance on Demand solution works for your workforce management.
Returning to Work?
Individuals who refuse suitable work, or to return to suitable work, without good cause are ineligible to receive unemployment benefits, and an overall fear of COVID-19 exposure is not considered “good cause” to refuse employment under state or federal law.
In Arizona, employers may report to DES that when work is available, individuals have refused it, or have not returned when it again became available.
If someone refuses to work, employers can notify the DES through its fraud referral portal, followed by filling out a form which includes a “Failure to Accept Suitable Work for Employers” section. The DES will review this submitted information to determine an individual’s eligibility for unemployment benefits.
With an overarching awareness of public health, the economy is moving in the right direction, with more people being able to return to jobs. Even so, we are sure many questions have come up or will soon regarding unemployment benefits eligibility, and the continued federal guidelines and laws regarding COVID-19 and leaving a job or not accepting one. Please feel free to contact us with any concerns or to learn how our workforce management solutions can help your company.