The Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security, or CARES Act, provide refundable tax credits to certain employers that continue to pay their employees during the COVID-19 pandemic. The Internal Revenue Service is also providing employers eligible for these credits with relief from the penalty for failing to timely deposit employment taxes.
Qualified Leave Wages Credits
The FFCRA established two refundable tax credits — the qualified sick leave wages credit and the qualified family leave wages credit — in an effort to provide “eligible employers” with the funds necessary to pay “qualified sick leave wages” and “qualified family leave wages” to their employees during the period April 1, 2020, to Dec. 31, 2020. The credits are allowed against the eligible employer’s portion of Social Security tax due on all wages paid during the period April 1, 2020, to Dec. 31, 2020. If the amount of the credit exceeds the employer’s Social Security tax liability, then the excess is treated as an overpayment and refunded to the employer.
Cathy Lanning serves as Senior Vice President for the Property & Casualty Marketing organization. In this role, she is responsible for the development and execution of integrated marketing plans for personal and commercial insurance products. Together with her team, she builds the brand and the Nationwide business leveraging data-driven direct marketing, partnerships, digital media, social media, cooperative agency marketing and lead generation strategies.
Most recently, Cathy led Strategic Partnerships where she established a large partnership portfolio with a data driven relationship-based selling approach. Together with partners such as alumni associations, cause organizations and sports organizations, Nationwide was able to understand the exact needs of a household and bring the right solutions at the right time to meet their protection needs. Under her leadership, the business unit grew by over 100% in five years.
Cathy joined Nationwide in 2007 as part of the leadership team that launched Nationwide Bank. Throughout her tenure at the company, she has held roles that require innovation, vision and team building. This includes establishing new digital marketing tools for agents, launching new products in the market, and establishing the Marketing Analytics organization. The Marketing Analytics organization delivered the first-generation marketing mix models, comprehensive digital analytics, and forecasting models, all of which helped Nationwide understand marketing effectiveness across channels and identified investment optimization pathways. The insights served the business lines across the company and opened new horizons for efficient growth and retention.
She has broad experience in brand management, analytics, partnership development, direct marketing, distribution marketing, innovation, product development and strategic planning. Prior to joining Nationwide, Cathy was the Brand Manager at The Scotts Company and Product Manager at WorldCom focused on Virtual Private Networks.
Cathy is a proud Ohio State University alumnus, holding a Bachelor of Science in Psychology, a Bachelor of Science in Business Administration (Marketing) and Masters in Business Administration. She is also a graduate from the Northwestern Kellogg Senior Women in Leadership program.
Outside of work, Cathy is a passionate advocate for education and community learning programs. To live this mission, Cathy serves on the board of The Ohio State University Alumni Association, The Girl Scouts of Ohio’s Heartland and The Wellington School.
Shelley Brazeau Temple serves as President of Nationwide P&C Personal Lines. In this role, Shelley is responsible for all aspects of the Personal Lines Profit and Loss (P&L) segment including product, underwriting, sales and distribution, claims and service.
She most recently served as Nationwide P&C Senior Vice President and Chief Claims and Operations Officer. Prior to that, she served as Senior Vice President of Member Solutions, leading the company’s insurance servicing and billing operations and direct phone sales organization.
Other leadership positions she has held are:
- Regional Vice President of Nationwide’s South Central Operations, responsible for sales, pricing, underwriting and product in a six-state geography, and managing a more than $660 million in sales revenue through exclusive agents and direct sales.
- VP of Strategy and Operational Effectiveness for Customer Service and Direct Sales of Nationwide, developing and executing an innovative contact center strategy.
- VP of Personal Lines Service Operations, responsible for personal lines service and processing center operations.
Shelley began her career at Nationwide as a Claims associate 27 years ago. Her increased responsibilities in leadership positions throughout the years also led her to work with internal audits, product and agency sales.
Shelley holds a bachelor’s degree from Bowling Green State University and the Chartered Property and Casualty Underwriting (CPCU) designation. She has served on several non-profit boards, including Ronald McDonald Children's Charities and the American Lung Association of the Midland States with participation in development, audit/finance and executive committees.
As an accounting professional, these are tough days. But that doesn’t mean your practice can’t grow during this season.
Eligible employers claim the qualified leave wages credits on Form 941, but they can benefit more quickly from the credits by reducing their federal employment tax deposits. In other words, eligible employers can retain federal employment taxes that they otherwise would have deposited in an amount up to the level of qualified leave wages credits for which they are entitled.
Eligible employers are businesses and tax-exempt organizations that have fewer than 500 employees, and are required under the FFCRA to pay qualified sick leave wages and qualified family leave wages. Qualified sick leave wages are wages an eligible employer is required to pay to an employee who is unable to work or telework because of either the employee’s personal health status as a result of COVID-19 or the employee’s need to care for others as a result of COVID-19. Qualified family leave wages are wages an eligible employer is required to pay to an employee who is unable to work or telework because the employee is caring for a child whose school or place of care is closed, or whose child care provider is unavailable, due to COVID-19.
The qualified sick leave wages credit is generally equal to the amount of qualified sick leave wages paid plus the amount of qualified health plan expenses allocable to the qualified sick leave wages paid plus the employer’s portion of Medicare tax due on the qualified sick leave wages paid. However, the maximum amount that can be treated as qualified sick leave wages paid to any one employee is limited, and the limit depends on why the employee receiving the wages is on sick leave. If the employee is on sick leave because of their own health status, the limit is $511 per day up to a total of $5,111. If the employee is on sick leave because they are caring for others, the limit is $200 per day up to a total of $2,000.
The qualified family leave wages credit is generally equal to the amount of qualified family leave wages paid plus the amount of qualified health plan expenses allocable to the qualified family leave wages paid plus the employer’s portion of Medicare tax due on the qualified family leave wages paid. However, the maximum amount that can be treated as qualified family leave wages paid to any one employee is limited to $200 per day up to a total of $10,000.
Employee Retention Credit
The CARES Act also established a refundable tax credit — the Employee Retention Credit — for “eligible employers” that pay “qualified wages” to their employees between March 13, 2020, and Dec. 31, 2020. The credit is equal to 50 percent of qualified wages paid, limited to a maximum credit of $5,000 per employee, and is allowed against the eligible employer’s portion of Social Security tax due on all wages paid during the period March 13, 2020, to Dec. 31, 2020. If the amount of the credit exceeds the employer’s Social Security tax liability, then the excess is treated as an overpayment and refunded to the employer.
Eligible employers claim the Employee Retention Credit on Form 941, but they can benefit more quickly from the credit by reducing their federal employment tax deposits. In other words, eligible employers can retain federal employment taxes that they otherwise would have deposited in an amount up to the amount of the Employee Retention Credit for which they are entitled.
Eligible employers generally are businesses and tax-exempt organizations that either:
- Fully or partially suspended operations during 2020 due to a “stay-at-home” order; or,
- Experience a significant decline in gross receipts during 2020
However, employers that receive a Paycheck Protection Program loan are not eligible employers and, thus, they may not claim the Employee Retention Credit.
Qualified wages are generally wages paid by an eligible employer to employees between March 13, 2020, and Dec. 31, 2020, and during the period the employer experienced either a full or partial suspension of operations due to a “stay-at-home” order; or a significant decline in gross receipts.
Relief from penalty for failure to deposit employment taxes
An employer’s failure to timely deposit federal employment taxes is generally subject to a penalty. However, the IRS recently announced in Notice 2020-22 that an employer that is eligible for the Qualified Leave Wages Credits and/or the Employee Retention Credit will not be subject to a penalty for failing to deposit employment taxes if:
- The amount of the employment taxes the employer fails to timely deposit is less than or equal to the amount of the employer’s anticipated Qualified Leave Wages Credits and/or the Employee Retention Credit; and
- The employer did not seek payment of an advanced credit by filing Form 7200, “Advanced Payment of Employer Credits Due to Covid-19.”
As a result, an employer may reduce, without penalty, the amount of a deposit of employment taxes by the following amounts paid in the calendar quarter prior to the required deposit:
- Qualified leave wages;
- Qualified health plan expenses allocable to qualified leave wages;
- The employer’s share of Medicare taxes paid on the qualified leave wages; and,
- Qualified retention wages.
