We continue to closely monitor the impact that COVID-19 is having on our industry and prepare for changes that are coming.
The Families First Coronavirus Response Act will be effective from April 1, 2020 – December 31, 2020.
We will continue to update this page as we make changes in iSolved that impact all of our clients, and as agencies release new information on how this will impact payroll.
Here are links to a number of resources and updates:
- Jan. 2021 – H.R. 133 – Consolidated Appropriations Act, 2021 Update
The President has signed the Consolidated Appropriations Act, 2021 which includes the following items:
- Support for the FFCRA credit extension through 3-31-21 for COVID Sick and COVID FMLA will be effective in the isolved system on 12-31-20. Users may continue to use the existing earnings and memos supported in 2020 to take advantage of the credits in 2021.
- Note: Please remember any hours and/or dollar limits entered on these earnings in 2020 reset when 2021 payments are made – it is up to the user to ensure the employee is not paid over the limits between the two years.
- The entry of the Employee Retention Credit (CARES Act) on the Business Credits screen supports entry through 06-30-21 and CARES Act credits entered on the screen will process with 2021 payrolls. This supports the ERC extensions.
- The expansion of the CARES Act provisions for Employee Retention Credits are currently being reviewed. Updates to the existing CARES Act Retention Credit Reports or new 2021 CARES Act Retention Credit Reports will be included at a future date. Additional details on the timeline will be forthcoming.
- Until the reports are updated or new reports are added, users may continue to enter credits provided they manually calculate the credits with the new guidelines.
- Note: Please remember to enter the creditable wages/expenses for the ERC and not the total wages.
- The due date for the withholding and payment of employee social security tax deferrals has been extended to 12-31-21 (previously was 04-30-21).
- We are monitoring the IRS, SBA, and DOL for anticipated guidance on the tax credits and deferral, along with the new round of PPP loans and changes to forgiveness rules.
- Oct. 23, 2020 – CARES Act PPP Loan Forgiveness Report updated in isolved. Instructions in University will be updated by Monday, Oct. 26.
- Oct. 13, 2020 – SBA updates FAQ on PPP Loan Forgiveness.
- Sept. 11, 2020 – The DOL posted additional FAQ on their FAQ page, and issued revisions to the FFCRA paid leave regulations, effective Sept. 16, 2020.
- Aug. 28, 2020 – The IRS and Dept. of Treasury issue a guidance document regarding the Sept. 1 deferral of SS taxes, yet many questions remain unanswered.
- Aug. 17, 2020 – The DOL has updated their FFCRA page to answer additional FAQ regarding businesses re-opening and childcare/school closures.
- Aug. 10, 2020 – President Trump signs Memorandum to defer Social Security Tax
- Aug. 10, 2020 – FFCRA Leave – Significant rule changes
- July 31, 2020 – The PPP Loan Forgiveness report has been updated again, additional updates will also be made on August 7.
- July 23, 2020 – It is expected that the PPP Forgiveness Platform will go live and begin accepting lender submissions on August 10, 2020, subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system.
- July 2, 2020 – The PPP Loan Forgiveness report in iSolved has been updated again to reflect recent changes and options for forgiveness.
- June 25, 2020 – The PPP FAQ has been updated to reflect the changes to the loan program.
- June 11, 2020 – Latest update in iSolved of the PPP Loan Forgiveness Report to assist clients with calculating forgiveness amounts. There is a detailed document in iSolved University.
- In order for this report to work, you’ll need to provide TPC with your loan origination date and we have to add this report to your company report list. Please email that to firstname.lastname@example.org.
- In order to access the report instructions, you’ll need to login to iSolved University. If you have never logged in to University before, click your name in the upper left hand corner when logged in to iSolved and click University. You’ll need to create a username/password the first time you login.
- When in University, search PPP in the search bar in the upper right menu bar, or click the hyper link above. The name of the report is CARES PPP Loan Forgiveness Report (Client).
- June 5, 2020 – President Trump signed the Paycheck Protection Program Flexibility Act of 2020 into law. Click HERE for an overview from SHRM. Important highlights include:
- Extension of the period in which proceeds must be spent for loans to be forgiven from an eight week period to 24 weeks, or until the end of the year, whichever comes first.
- Businesses also have as long as five years, instead of two years, to repay any money owed on a loan and can use a larger percentage of proceeds on rent and other approved non-payroll expenses (now 40% instead of previous 25%).
- Elimination of the 2-year loan repayment restrictions for future borrowers.
- Allows for payroll tax deferment for PPP receipients.
- Extended the June 30 rehiring deadline.
- May 27, 2020 – Treasury.gov CARES Act Website with most up to date information.
- April 7, 2020 – Updated FAQ from the SBA and Treasure on SBA Loans re: Payroll Protection Program
- April 6, 2020 – Information on codes at the bottom of this page updated and email sent to clients with same information.
- April 6, 2020 – Recording, slides & Q&A of the myHRcounsel webinar from Friday, April 3, 2020 – Legal Updates for Small Businesses due to COVID-19
- March 31, 2020 – COVID-19 codes have been added to iSolved and to the Time Entry Grid as both HRS and $ codes. Please download the flow charts above to see which codes apply to each.
- March 31, 2020 – CARES Act details on SBA loans & Payroll Protection Program, businesses can start applying April 3, 2020. US Treasury COVID-19 homepage.
- March 28, 2020 – DOL publishes third round of FAQs. Most notably are details on exemption qualifications for businesses with fewer than 50 employees (FAQ 58-59), this is not additional FMLA on top of existing 12 weeks (FAQ 44), EPSL can be on top of 12 weeks FMLA (FAQ 45), and relief for small businesses with fewer than 24 employees for job restoration (FAQ 43).
- March 27, 2020 – CARES Act passed
- March 26, 2020 – DOL issues FFCRA Spanish & English Employee Rights poster on this page. If you click through from that page to the Q&A page, they have also expanded this page with clarification on intermittent leave, retroactive coverage, and how to calculate your employee count, and much more.
- March 24, 2020 – DOL Q&A, including brief statement for companies with fewer than 50 employees
- Recording of March 23 Mammoth HR COVID-19 FAQ and Best Practices Webinar, the slides, and their public COVID-19 website
- Recording of March 23 myHRcounsel COVID-19 FAQ and Best Practices Webinar, the slides, and their COVID-19 website
- Executive orders relating to COVID-19 by state
Forms and Documents
- Return to Work Checklist (May 2020)
- Employee and Employer Fact Sheets for distribution
- State-by-State Final Paycheck Guidance Document
- Flow Chart – Emergency FMLA (updated to list iSolved codes to use)
- Flow Chart – Emergency Paid Sick Leave (updated to list iSolved codes to use)
- HR 6201 Recap
- Small Business Guide and Checklist provided by US Chamber of Commerce for Payroll Protection Program
USING COVID-19 PAY CODES
If you used COVID codes PRIOR to April 10, 2020, the credits will be available for use on payrolls run AFTER April 17, 2020.
- Paying Emergency Sick: These pay types (Covid 511 and Covid 200) are available for immediate use. There are two codes, and the flow chart explain which code should be used in each instance. Covid 511 has a YTD limit of $5,110.00 (10 days at $511/day). Covid 200 has a YTD limit of $2,000.00 (10 days at $200/day). Both pay types are not taxable for Employer Social Security and are eligible for the tax credit. We have mapped the codes to the Time Entry Grid (Regular template).
- Paying Emergency FMLA: This pay type (Covid FMLA) is available for immediate use. See the flow chart for determining eligibility. Covid FMLA has a YTD limit of $10,000 (50 days at $200/day). This code is also available on the Time Entry Grid (Regular template).
- COVID Ins Sick or COVID Ins FMLA: These memo codes have been created for pro-rated company paid health insurance relating to COVID time and added to your Time Entry Grid (Regular template).
When any of the above codes are used, iSolved will automatically calculate a tax credit in the amount equal to the total of all these codes combined, along with the employer portion of Medicare tax (1.45% of gross COVID paid wages). These codes are already exempt from the employer portion of Social Security Tax (6.2% of wages).
The credit will appear on your Payroll Summary each time you process payroll. Credits will reduce the federal tax collection and deposit. The amount of the credit realized on a specific payroll is either the amount of the current credit available or the total current federal tax liability, whichever is less.
On the Payroll Summary below, you will see new line items for COVID tax credits which reduce the amount TPC will debit from your company for each payroll run where you utilize these codes. If the COVID credit is greater than your scheduled federal tax liability, the additional credit will be carried forward to, and reduce collections for, future payroll runs.
RECOMMENDATIONS WHEN USING COVID CODES
- COVID 511, COVID 200 and COVID FMLA Hours codes do NOT take into account daily limits. For example, if you have an employee that makes $30 per hour and works an 8 hour day who is out caring for a family member with COVID-19 that falls under the paid sick leave at $200 per day; their normal daily pay would be $240 per day. iSolved has no way of capping this. In this instance, you would want to enter $200 in the COVID 200 $ code on the Time Entry Grid instead of entering 8 hours under the HRS code. If you enter a $ amount instead of HRS, it will pay the straight dollar amount and will not apply a 2/3 calculation.
- Preview, Preview, Preview. We cannot stress this enough: Preview your payroll reports. We recommend reviewing the first 3 reports in the Preview list at a minim – the Payroll Summary, Payroll Register & Exceptions Report. The Exceptions report will show any employees that have deductions scheduled to be taken but do not have enough wages to have them deducted.
- Turn on deduction arrears tracking. You can see if this is turned on for your deduction codes by navigating to Client Management > Payroll > Deductions. Click on each deduction code. Check to see if the “Apply Arrears by Default” box is checked. This will automatically catch up any money owed to the company for deductions when employees return.
TAXATION AND CREDIT OF COVID WAGES
Employee wages paid under the COVID 511, COVID 200 and COVID FMLA are all subject to ALL employee-paid federal taxes, including the employee portion of Social Security, Medicare, and federal income withholding tax. The COVID wages are EXEMPT from the employer portion of Social Security tax, which means that only the employer Medicare taxable wages and corresponding Medicare tax is applicable for the credit.
For assistance with calculating average hours and pay for employees with variable hours and/or rates, there is a report in iSolved under Client Reports. In iSolved, navigate to Reporting > Client Reports and search for FFCRA. The report is titled FFCRA Average Hours and Wage Report.
ADVANCE CREDITS VIA FORM 7200
If you have paid employees using the COVID codes and applied for an accelerated refund for tax credits via form 7200 directly with the IRS, please contact our support team immediately! We need to ensure that unused credits you are entitled to are being refunded and not used on subsequent payrolls. If you have not yet filed a form 7200 to get an accelerated refund (TPC will not do this for you), any carryover credit will automatically be applied to future payrolls runs in the same quarter.
CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY (CARES) ACT
Paycheck Protection Act: There is a report in iSolved to assist in calculating payroll costs. In iSolved, go to Reporting > Client Reports and type CARES in the search bar. The report is called CARES Paycheck Protection Program Report.
Employee Retention Credit:We are currently evaluating methods to track wages and employer expenses eligible for the retention credit. We will continue to update you with progress on this functionality.
Employer Tax Deferrals: We will be contacting you this week about setting up the deferred employer FICA option if you would like to utilize this feature. Please be aware, neither the Employee Retention Credit nor the Employer FICA tax deposit deferral are available if you receive a Paycheck Protection Act SBA loan.
Our team cannot provide advice on what codes you should use in specific employee instances. We have created these flow charts for you based on the FFCRA Q&A page to assist you with this matter, but it is up to you to determine the reason your employee is out, and therefore which code to use.
We will continue to provide you with updates as we learn more about processing these credits and any news we feel may impact or benefit your company.
Thank you for your patience during these unprecedented times. This is a time of new challenges and uncertainty and we are here to support you as we navigate these challenges together.
The Payroll Company