The Senate’s upcoming coronavirus relief bill will include an “enhanced” hiring and retention payroll tax credit, according to Senate Finance Chairman Chuck Grassley, a Republican from Iowa.
This provision was initially enacted in the march CARES Act and provided a 50% tax credit for qualified wages. The new GOP Senate bill increases the credit to 65%. The House Democrats’ bill, which was approved in May, increased the credit to 80% of qualified wages.
Eligibility for the credit has been lowered in the Senate bill, requiring that gross receipts must decline by 25% when compared to the same calendar quarter in the previous year. Eligibility in the House Democrat bill is a 10% decrease in gross receipts. In the CARES Act, company operations had to be fully or partially suspended, and gross receipts had to decline by at least 50%.
Under the Senate bill, a company is eligible for the credit while also receiving a loan from the Payroll Protection Program, which is a forgivable loan to small businesses to keep their workers on the payroll. The House Democrat bill also allows businesses to take the retention credit and receive a PPP loan. The CARES Act did not allow businesses to benefit from both provisions.
The differences between the Senate bill and the legislation that House Democrats passed in May must be ironed out before the provision can become law.
