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Murphy-led Group of Bipartisan Members Push Tax Credit Bill to Reduce Layoffs

May 8, 2020 by Dan McCue
Murphy-led Group of Bipartisan Members Push Tax Credit Bill to Reduce Layoffs

WASHINGTON – A bipartisan group of House members led by Rep. Stephanie Murphy, D-Fla., is seeking to stem the stunning wave of layoffs across the country due to the coronavirus pandemic by expanding the employee retention tax credit.

Roughly 33.5 million people have now filed for jobless aid in the seven weeks since the coronavirus began forcing millions of companies to close their doors and slash their workforces, the Labor Department reported Thursday.

That is the equivalent of one in five Americans who had been employed back in February, when the unemployment rate had reached a 50-year low of just 3.5%.

As of Friday morning, the national unemployment rate stands at 14.7%, the highest rate since the Great Depression.

The employee retention tax credit, a measure Congress and the president recently enacted as part of the $2.2 trillion CARES Act relief legislation, encourages businesses of all sizes to retain their employees so workers may continue to receive income and employer-sponsored health insurance without having to seek unemployment benefits.

The ERTC also ensures workers and businesses are better-positioned to resume normal operations once the economic crisis caused by COVID-19 comes to an end.

Rep. Murphy, who was the first member of Congress to propose inclusion of the tax credit in the CAREs Act and worked successfully to secure its passage, is now urging her colleagues in the House to include enhancements to the tax credit program in the next coronavirus relief bill.

She’s been joined in this effort by Reps. John Katko, R-N.Y., Suzan DelBene, D-Wash., Brian Fitzpatrick, R-Pa., and Chris Pappas, D-N.H..

“Democrats and Republicans in Congress, working with the Trump administration, have already managed to put politics aside and pass four bills to mitigate the health and economic effects of COVID-19,” Murphy said. “Congress can once again act in this ‘country-first’ spirit by expanding this bipartisan initiative to reduce layoffs, protect workers’ health insurance benefits, and help ensure a quick and robust economic recovery.”

The employee retention tax credit included in the CARES Act is a refundable tax credit equal to 50% of up to $10,000 in qualified wages that an eligible employer, including a non-profit organization, pays to an employee between March 12, 2020 and January 1, 2021– in other words as much as $5,000 per employee.

An employer is eligible for the credit if they had to fully or partially suspend operations due to COVID-19, or if the employer experienced a “significant decline in gross receipts,” due to COVID-19, defined as having gross receipts that are 50% less than gross receipts in the same quarter in the prior calendar year.

For large employers (defined as those with more than 100 full-time employees in 2019), qualified wages are the wages paid to an employee for time that the employee is not providing services. If the employer had 100 or fewer full-time employees, all wages paid by the employer are credit-eligible.

The bipartisan bill introduced by Murphy and her co-sponsors, called the Jumpstarting Our Businesses’ Success Credit (JOBS Credit) Act of 2020, would make a number of targeted improvements to the ERTC to better fulfill its goal of keeping workers connected to their jobs during this crisis. The changes include:

  • Increasing the credit percentage from 50% to 80% of qualified wages;
  • Increasing the per-employee limitation from $10,000 for all calendar quarters to $15,000 per calendar quarter (and an aggregate of $45,000 for all calendar quarters);
  • Changing the threshold for treatment as a large employer from employers having more than 100 employees to employers having more than 1,500 employees (based on the average number of full-time employees in 2019) or having gross receipts above $41.5 million in 2019;
  • Making it easier for employers to qualify for the credit by phasing in the credit, so that employers who have experienced more than a 20% decline in gross receipts can claim a portion of the credit;
  • Clarifying that “qualified wages” include qualified health benefits and that employers who continue providing such benefits to their employees qualify for the ERTC even if they do not continue paying other qualifying wages; 
  • Allowing state, territory, and tribal governmental employers (and any political subdivision, agency, or instrumentality of these entities) to claim the credit if these employers retain employees notwithstanding the closure of their operations; and
  • Improving coordination between the ERTC and the Paycheck Protection Program so employers can be eligible for both programs, but with guardrails in place to prevent “double dipping.”

“I am proud to join Reps. Murphy, DelBene, Fitzpatrick, and Pappas in introducing bipartisan legislation to improve and expand the Employee Retention Tax Credit (ERTC) established under the CARES Act,” Katko said. 

“This legislation would allow more Central New York businesses to utilize the ERTC, increase relief for participating employers, and support continued access to employer-sponsored health insurance for workers and their families,” he continued. “These enhancements are critical to strengthening our economy and saving local jobs amid the COVID-19 pandemic.”

DelBene said keeping employees on payroll is a mutual goal of workers and businesses during this difficult economic time.

“We need to provide targeted, practical relief for businesses and their employees that have been impacted by COVID-19,” she said. “Expanding the Employee Retention Tax Credit will further support impacted businesses by covering more of an employee’s salary for longer and delivering relief quickly.”

Fitzpatrick agreed.

“It is incredibly important that as many Americans as possible are able to stay employed and on the payroll during this crisis. We need to continue to support businesses and workers in their time of need,” he said. “I am proud to sign on to this bipartisan legislation, which will bring much needed clarity and assistance to our workers and their employers.”

“COVID-19 has shuttered our main streets and decimated America’s small business economy in ways we never thought possible before this pandemic,” Pappas said.

“Although I am glad swift bipartisan action has been taken, we must continue to meet the changing needs of our small businesses,” he continued. “That is why I am proud to continue working in a bipartisan manner to build upon and streamline the Employee Retention Tax Credit. It is critical we continue to strengthen our federal programs so that small businesses can pay their bills, retain their employees, and remain ready to open their doors again soon.”

The full text of the bill can be found here. A one-page fact sheet on the bill can be found here.

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