US Senators Aim To Broaden Tax Credit For Employee Retention During Pandemic

U.S. Senators from both sides of the aisle are calling for Senate leaders to broaden an important economic aid provision as the chamber considers the $1.9 trillion pandemic aid package in the week to come, CNBC reported. Legislators wrote to Chuck Schumer (D-NY), the Senate majority leader, and Mitch McConnell (R-KY), the Senate minority leader, asking the leaders to bolster the employee retention tax credit in the legislation progressing in Congress.

Companies can currently seek refundable tax credits for 70 percent of qualified wages and insurance expenses, with a cap of $10,000 for each employee per quarter. They are currently eligible up to June in the event that government public health orders completely or partly inhibit their operations, or if they get under 80 percent of sales in a quarter compared to the same quarter in 2019.

Initially put into place as a portion of the CARES Act in 2020, the policy seeks to incentivize firms to keep paying workers as the coronavirus health crisis negatively impacts the economy. However, the senators said they aim to modify the tax policy to remove a stipulation that allows firms with more than 500 staffers to seek the credit just for “compensation provided to furloughed employees who are paid but not working.” In lieu of that provision, they want firms that lost a minimum of 85 percent of sales to have the ability to use the credit for all staffers.

The news comes as the budget committee of the U.S. House gave the go-ahead to legislation with $1.9 trillion in new pandemic aid. The panel passed the initiative with a 19 to 16 vote.

“We are in a race against time. Aggressive, bold action is needed before our nation is more deeply and permanently scarred by the human and economic costs of inaction,” said Rep. John Yarmuth (D-KY), the chair of the budget committee, per a published report.