IRS Issues Guidance on the Employee Retention Credit
May 19, 2020
The Internal Revenue Service (IRS) has created a webpage dedicated to Coronavirus Tax Relief and Economic Impact Payments. In addition, they have provided a FAQ related to tax credits.
Eligible employers can claim the employee retention credit, a refundable tax credit equal to 50% of up to $10,000 in qualified wages (including health plan expenses), paid after March 12 and before Jan. 1, 2021.
Eligible employers are businesses with operations that have been partially or fully suspended due to governmental orders amid COVID-19, or businesses that have a significant decline in gross receipts compared to 2019.
The refundable credit is capped at $5,000 per employee and applies against certain employment taxes on wages paid to all employees. Eligible employers can reduce federal employment tax deposits in anticipation of the credit. They can also request an advance of the employee retention credit for any amounts not covered by the reduction in deposits. The advanced payments will be issued by paper check to employers.
More information on eligible employers and qualified wages can be found here.
Question of the Week
Q. If the credit union pays a post-dated check early, is it liable for any NSF (non-sufficient funds) fees the member incurs?
A. No, unless the member gave notice of the postdating that described the check with reasonable certainty. The credit union can charge the check against the account if it is properly payable, even though the payment was made before the date of the check. The member must give the credit union reasonable opportunity to act. If this occurs and the credit union charges against the account before the date stated in the notice of postdating, the credit union is liable for damages for any loss resulting from its act. Therefore, without a notice of postdating to the credit union, the credit union can pay the check early and is not required to reimburse the member for any fees.
National Credit Union Administration (NCUA)
Establishment of CLF Agent Memberships
The NCUA issued Letter to Credit Unions 20-CU-14 to inform credit unions that all eleven corporate credit unions have joined the Central Liquidity Facility as agent members. As agent members, the corporate credit unions have purchased CLF capital stock for their member credit unions with assets less than $250 million. This means that all credit unions with assets less than $250 million that are members of a corporate credit union are now eligible to apply for a loan from the CLF.
Consumer Financial Protection Bureau (CFPB)
CFPB Outlines Responsibilities of Financial Firms During Pandemic
The CFPB released a statement and FAQ outlining the responsibility of certain financial firms during the pandemic. The statement outlines the billing error responsibilities of credit card issuers and includes FAQs on change in terms under the Truth in Savings Act that are favorable for the consumer and the recent FRB interim final rule which deleted the six-per-month transfer limit on savings accounts.
CFPB Issues Consumer Guide on Mortgage Relief Options
The CFPB and CSBS released a consumer relief guide with borrowers’ rights to mortgage payment forbearance and foreclosure protection under the federal CARES Act.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of May 13. The last update prior to this was May 7.
Questions? Contact the Compliance Hotline: 1.800.546.4465; firstname.lastname@example.org.