Blog Post

Unemployment and Tax Credits – Navigating the Process

The Cleveland Group, CPAs is working diligently to assist our clients through this process and monitoring all of the tax legislation to further assist our clients.  Rest assured we are in this together and we will continue to serve our clients in these uncertain times.  Below is pertinent information that the business community will need to work through assisting their company and their employees.  Should you need assistance we are here to help.

Georgia Unemployment Emergency Changes with Penalties for Employers in Response To COVID-19

The Georgia Department of Labor announced this week that it passed emergency rules regarding partial unemployment claims and shifted Career Center registration from in-person to online. The rule will remain in effect for 120 days or until the agency proposes or adopts a subsequent rule.

Overview of Requirements

Employers are required to file partial claims on behalf of their employees whenever it is necessary to temporarily reduce work hours or there is no work available for a short period. Any employer found to be in violation of this rule will be required to reimburse GDOL for the full amount of unemployment insurance benefits paid to the employee.

All employers must file partial claims with respect to any week during which an employee (full-time/part-time) works less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency.  In addition, all partial claims must be filed by employers online in the Employer Portal.

How To File Partial Unemployment Claims Online

To submit partial claims, employers not already registered must register online on the GDOL Employer Portal. Once registered, employers can follow the steps below to file partial claims:

1. Log into the Employer Portal.
2. Select the employer account number under Registered Account.
3. Select the File Partial Claims link under Common Links.
4. Follow the on-screen instructions.

For step-by-step registration instructions, there is an Administrator Guide (https://eresponse.gdol.ga.gov/pdf/uitax/EmployerPortalAdministratorGuide.pdf) available for download on the Employer Portal page.

Employees Exclusions

The GDOL provides several scenarios in which employers should not file a partial claim. These include the following:

• Employees who will be paid for the temporary layoff period paid with salary, paid sick leave, paid vacation, or paid family leave
• Employees that are or were on scheduled leave prior to the layoff period
• Employees that are employed by a temporary agency and are currently working at your place of business
• Employees were employed in another state in the last 18 months. These employees should be directed to apply for unemployment benefits online.
• Employees that were employed with the federal government or on active military service in the last 18 months. These employees should be directed to apply for unemployment benefits online.

Maintaining compliance with the new GDOL Rules, employers should be aware of the following the guidelines:

• Double check and accurately report the employee’s name, social security number, and date of birth to match the Social Security Administration’s records.
• There must be seven days between payment week ending dates.
• Do not submit claims until after the week end date on the claim.
• Report paid time off, vacation pay, holiday pay, earnings, etc., during the week it was earned rather than the week it was paid.
• Be sure to report any additional income employees are receiving to the GDOL, except Social Security benefits, jury duty income, and pay for weekend military reserve duty.

Should you need additional assistance, please feel free to contact our office at (706) 288-2800.

Payroll Tax Credits

The coronavirus relief bill signed by President Donald Trump late Wednesday contains, among its many provisions, several tax credits for employers who provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons.

Payroll tax credit for required paid family leave

Subject to certain limitations, the bill provides an employer payroll tax credit that equals 100% of the qualified family leave wages paid by the employer under the portion of the bill known as the Emergency Family and Medical Leave Expansion Act (Division C of the bill). The Emergency Family and Medical Leave Expansion Act requires employers with fewer than 500 employees to provide public health emergency leave under the Family and Medical Leave Act (FMLA), P.L. 103-3, when an employee is unable to work or telework due to a need for leave to care for a son or daughter under age 18 because the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency related to COVID-19. (Employers with fewer than 50 employees can be exempted from the requirement.)

The credit is available for eligible wages paid during a period that begins on a date starting on a date within 15 days of enactment (to be designated by Treasury) and through Dec. 31, 2020. The credit would apply against the employer portion of Sec. 3111(a) old age, survivors, and disability insurance (OASDI) taxes or Sec. 3221(a) Tier 1 Railroad Retirement Act excise taxes. The credit is generally available for up to $200 in wages for each day an employee receives qualified family leave wages. A maximum of $10,000 in wages per employee would be eligible for the credit. The amount of the credit is increased by the amount of the Sec. 3111(b) Medicare tax imposed on the qualified family leave wages for which credit is allowed.

If an employer claims the credit, the employer’s gross income will be increased by the amount of the credit (meaning the credit is not taken into account for purposes of determining any amount allowable as a payroll tax deduction, deduction for qualified family leave wages, or deduction for health plan expenses), and no credit will be allowed for wages for which a Sec. 45S family and medical leave credit is claimed. The credit would not apply to the federal government, the government of any state or any subdivision of a state, or any agencies or instrumentalities of these entities. Employers also could elect not to apply the new provision for any calendar quarter.

Self-employed Individuals: Eligible self-employed individuals would be eligible for a refundable credit against income tax for qualified family leave equivalent amounts. An eligible self-employed individual is an individual who regularly carries on any trade or business (as defined in Sec. 1402) and would be entitled to receive paid leave under the Emergency Family and Medical Leave Expansion Act if the individual were an employee.

Wages paid under the Emergency Family and Medical Leave Expansion Act are not considered wages for purposes of the Sec. 3111(a) OASDI tax or the Sec. 3221(a) Railroad Retirement Act excise taxes.

Payroll tax credit for required paid sick leave

Subject to certain limitations, the bill provides an employer payroll tax credit that equals 100% of the qualified sick leave wages paid by the employer under the portion of the bill known as the Emergency Paid Sick Leave Act (Division E of the bill). The Emergency Paid Sick Leave Act requires employers with fewer than 500 employees to provide up to 80 hours of paid sick time through the end of this year if the employee is unable to work due to being quarantined or self-quarantined or having COVID-19 or because the employee is caring for someone who is quarantined or self-quarantined or has COVID-19 or if the employee is caring for children whose school has been closed because of COVID-19 precautions. (Employers with fewer than 50 employees can be exempted from the requirement.)

The credit is effective for sick leave wages paid starting on a date within 15 days of enactment (to be designated by Treasury) and through Dec. 31, 2020. The credit will apply against Sec. 3111(a) OASDI taxes or Sec. 3221(a) Tier 1 Railroad Retirement Act excise taxes. The credit is generally available for up to $511 in wages (for workers who are quarantined or self-quarantined or who have COVID-19) and wages of up to $200 for other workers for each day an employee receives qualified sick leave pay. The credit would be available for up to 10 days per calendar quarter. The amount of the credit is increased by the amount of the Sec. 3111(b) Medicare tax imposed on the qualified sick leave wages for which credit is allowed.

To prevent double benefits, employers’ gross income will be increased by the amount of the credit (meaning the credit is not taken into account for purposes of determining any amount allowable as a payroll tax deduction, deduction for qualified sick leave wages, or deduction for health plan expenses), and no credit will be allowed for wages for which a Sec. 45S family and medical leave credit is claimed. The credit would not apply to the federal government, the government of any state or any subdivision of a state, or any agencies or instrumentalities of these entities. Employers also could elect not to apply the new provision for any calendar quarter.

The credit can be increased by certain qualified health plan expenses of the employer that are allocable to qualified sick leave wages for which the credit is allowed.

Self-employed individuals: The bill also provides eligible self-employed taxpayers with a refundable credit against income tax for qualified sick leave equivalent amounts. An eligible self-employed individual is an individual who regularly carries on any trade or business (as defined in Sec. 1402) and would be entitled to receive paid leave under the Emergency Paid Sick Leave Act if the individual were an employee.

Wages paid under the Emergency Paid Sick Leave Act are not considered wages for purposes of the Sec. 3111(a) OASDI tax or the Sec. 3221(a) Railroad Retirement Act excise taxes.