Payroll tax credit for personal protective equipment

(a)

In general

In the case of an eligible employer, there shall be allowed as a credit against applicable employment taxes for each calendar quarter an amount equal to 90 percent of the amount paid or incurred by such employer during such calendar quarter for eligible personal protective equipment provided free of charge by such employer for the use or for the benefit of employees and customers of such employer. (b)

Limitations and refundability

(1)

Dollar limitation

The amount of the credit allowed under subsection (a) with respect to any eligible employer for any calendar quarter shall not exceed the lesser of— (A)$6,250, or (B)the greater of— (i)2 percent of the employer’s gross receipts for such calendar quarter, or (ii)0.5 percent of the employer’s gross receipts for the employer’s last taxable year ending in 2019. (2)

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. (3)

Refundability of excess credit

(A)

In general

If the amount of the credit under subsection (a) exceeds the limitation of paragraph (2) 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. (c)

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)

Eligible employer

(A)

In general

The term eligible employer means, with respect to any calendar quarter, any employer— (i)which was carrying on a trade or business during such calendar quarter, and (ii)the average number of full-time employees (within the meaning of section 4980H of the Internal Revenue Code of 1986) employed by such employer during such calendar quarter was less than 500. (B)

Certain tax-exempt organizations and governmental employers

In the case of an organization which is described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, or any governmental entity (other than a governmental entity described in subparagraph (D)), subparagraph (A)(i) shall apply to all operations of such organization or government. (C)

Exclusion of certain tax-exempt organizations

The term eligible employer shall not include any organization described in section 501(c)(4) of such Code unless such organization does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. (D)

Exclusion of Federal and foreign governments

The term eligible employer shall not include the Government of the United States, the government of any foreign country, or any agency or instrumentality of the foregoing. (3)

Eligible personal protective equipment

The term eligible personal protective equipment means masks or face coverings, goggles, face shields, respiratory protection, gloves, gowns, shields or barriers, hand sanitizers, surface cleaners or disinfectants, items that are intended to reduce the spread of infectious disease, and any other supplies or equipment that the Secretary determines appropriate for purposes of this section after consultation with Secretary of Health and Human Services and the Secretary of Labor. (4)

Secretary

The term Secretary means the Secretary of the Treasury or the Secretary's delegate. (5)

Other terms

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. (d)

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. (e)

Denial of double benefit

For purposes of chapter 1 of such Code, the gross income of any eligible employer, for the taxable year which includes the last day of any calendar quarter with respect to which a credit is allowed under this section, shall be increased by the amount of such credit. (f)

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. (g)

Third-Party payors

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

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. (i)

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. (j)

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. (k)

Application

This section shall only apply to calendar quarters beginning after December 31, 2019, and before January 1, 2022.