As COVID-19 continues to spread through North Carolina, keeping people indoors and keeping your business closed or at reduced functionality, you may be having to lay people off or even close your doors. To help you navigate how unemployment insurance is affected by COVID-19 and what it means for your business, our CPAs in Raleigh are breaking down information directly from the North Carolina Department of Commerce.
Employer Tax Credit
First, as an employer, you’ll receive a tax credit equal to the amount of any contribution you’ve made to the state’s Unemployment Insurance Fund in the first quarter of 2020. There’s no additional paperwork necessary with this, you simply need to file your 1Q2020 Tax and Wage Report that shows any contribution you made. You’ll receive the credit which will be applied to any UI contributions due in the second quarter of 2020. If the credit you are supposed to receive for what you paid in is more than what is due in the second quarter, you’ll receive a refund. Also, if you currently have outstanding bills for the first quarter of 2020, those are no longer due and will be cancelled.
A Pause on Charging Employers’ Accounts for Benefits
Governor Cooper’s Executive Order No. 118 outlines that the Division of Employment Security within the Department of Commerce will not be charging employers for any Unemployment Insurance benefits paid to employees who are not working due to COVID-19. If you receive a request for separation information, be sure to indicate whether the separation was due to COVID-19 because if the claim is from something else, you may be charged.
Filing Unemployment Claims on Behalf of Employees
For employees who are laid off temporarily or whose hours equal less than 60 percent of their customary full-time hours in a standard work-week, you can file for unemployment benefits on behalf of your employees. This is called an “attached claim,” and many of the requirements needed to file attached claims have been lifted. This means:
- You, the employer, don’t need to prepay unemployment benefits for your employees at the time the claim is filed;
- You can file attached claims for longer than six weeks;
- You can submit the claim more than once in a year;
- You don’t need to have a positive credit balance with the Division of Employment Security;
Also, if you are a business owner who is paid a salary and pay unemployment insurance taxes for yourself, you may be eligible for unemployment insurance benefits.
Direct COVID-19 Support Payments
If you want to offset some of the financial challenges your employees are facing while they are off work, you can provide temporary, voluntary support payments that won’t affect or impair their unemployment insurance benefits. To do this, you must:
- File for UI on behalf of your employees who will be receiving support payments.
- Submit a written plan via this form and submitting it to email@example.com
In order to provide added support, in addition to your employees unemployment insurance, you have to follow the following conditions:
- Payment is voluntary to assist your employee while they are furloughed;
- Must be for services already rendered (ie: it’s not an advance on a paycheck);
- You can’t ask or attempt to force the employee to repay the support payment;
- The payment must not obligate the employee to work or perform an act in connection with their status as an employee.
Contact Us for Business Tax Assistance
We understand that this is a confusing and challenging time for businesses. Our CPAs are here to help you through it with tax consultation and tax preparation services for businesses and individuals. We serve Raleigh, Cary, Garner, Wake Forest, Wilson, and surrounding communities. Reach out to us today at 919-872-0866 or fill out our form below to schedule a consultation.