Payroll credit for bonuses paid to employees who worked continuously during the COVID-19 pandemic

(a)

In general

In the case of an employer, there shall be allowed as a credit against applicable employment taxes for the calendar quarter which includes the last day of the covered period an amount equal to 100 percent of the qualified bonuses paid to eligible employees of such employer during such calendar quarter.(b)

Qualified bonus

For the purposes of this section—(1)

In general

The term qualified bonus means, with respect to any eligible employee of any employer, a supplemental wage (within the meaning of the rules and regulations under section 3402) equal to—(A)in the case of an eligible employee whose annualized covered period wages do not exceed $55,000, an amount equal to the applicable percentage of the wages (as defined in section 3401) paid by such employer to such employee during the covered period, and(B)in the case of an eligible employee whose annualized covered period wages exceed $55,000 but do not exceed $99,000, $600.(2)

Applicable percentage

The term applicable percentage means, with respect to any eligible employee of any employer, 30 percent reduced (but not below zero) by 0.1 percent for each $100 that the such employee’s annualized covered period wages exceeds $30,000.(3)

Annualized covered period wages

The term annualized covered period wages means, with respect to any eligible employee of any employer, the amount of wages (as defined in section 3401 and determined without regard to any qualified bonuses) which would have been paid to such employee by such employer during a 365-day period if such employee were paid at the same rate during all of such period as such employee was paid during the covered period.(c)

Eligible employee

For purposes of this section, the term eligible employee means, with respect to any employer, any employee if—(1)such employee had taxes withheld by such employer under section 3101 for the entirety of the covered period, and(2)such employee’s annualized covered period wages do not exceed $99,000.(d)

Covered period

For purposes of this section, the term covered period means the period beginning on March 13, 2020, and ending on the earlier of July 31, 2020, or the end of the National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak.(e)

Refundability

(1)

Credit limited to employment taxes

The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable employment taxes (reduced by any credits allowed under subsections (e) and (f) of section 3111 of the Internal Revenue Code of 1986, sections 7001 and 7003 of the Families First Coronavirus Response Act, and section 2301 of the CARES Act) on the wages paid with respect to the employment of all the employees of the eligible employer for such calendar quarter.(2)

Refundability of excess credit

(A)

In general

If the amount of the credit under subsection (a) exceeds the limitation of paragraph (1) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of the Internal Revenue Code of 1986.(B)

Treatment of payments

For purposes of section 1324 of title 31, United States Code, any amounts due to the employer under this paragraph shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.(f)

Other definitions

For purposes of this section—(1)

Applicable employment taxes

The term applicable employment taxes means the following:(A)The taxes imposed under section 3111(a) of the Internal Revenue Code of 1986.(B)So much of the taxes imposed under section 3221(a) of such Code as are attributable to the rate in effect under section 3111(a) of such Code.(2)

Secretary

The term Secretary means the Secretary of the Treasury or the Secretary's delegate.(3)

Other terms

Except as otherwise provided in this section, any term used in this section which is also used in chapter 21 or 22 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such chapter.(g)

Aggregation rule

All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986, or subsection (m) or (o) of section 414 of such Code, shall be treated as one employer for purposes of this section.(h)

Certain rules To apply

For purposes of this section, rules similar to the rules of sections 51(i)(1) and 280C(a) of the Internal Revenue Code of 1986 shall apply.(i)

Election not To have section apply

This section shall not apply with respect to any eligible employer for any calendar quarter if such employer elects (at such time and in such manner as the Secretary may prescribe) not to have this section apply.(j)

Third-Party payors

Any credit allowed under this section shall be treated as a credit described in section 3511(d)(2) of such Code.(k)

Transfers to Federal Old-Age and Survivors Insurance Trust Fund

There are hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 14 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of this section (without regard to this subsection). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund or Account had this section not been enacted.(l)

Treatment of deposits

The Secretary shall waive any penalty under section 6656 of the Internal Revenue Code of 1986 for any failure to make a deposit of any applicable employment taxes if the Secretary determines that such failure was due to the reasonable anticipation of the credit allowed under this section. (m)

Regulations and guidance

The Secretary shall issue such forms, instructions, regulations, and guidance as are necessary—(1)to allow the advance payment of the credit under subsection (a), subject to the limitations provided in this section, based on such information as the Secretary shall require,(2)to provide for the reconciliation of such advance payment with the amount advanced at the time of filing the return of tax for the applicable calendar quarter or taxable year, and(3)with respect to the application of the credit under subsection (a) to third-party payors (including professional employer organizations, certified professional employer organizations, or agents under section 3504 of the Internal Revenue Code of 1986), including regulations or guidance allowing such payors to submit documentation necessary to substantiate the eligible employer status of employers that use such payors.