Authored by Christine Faris, Devin Tenney and Krissa Lietz The IRS recently provided further details relating to the Emergency Paid Sick Leave (EPSL) tax credit and the Emergency Family and Medical Leave (EFML) tax credit under the American Rescue Plan Act of 2021 (ARPA). These tax credits are designed to assist small businesses in providing paid time off for employees to receive COVID-19 vaccinations. The IRS also issued guidance (Fact Sheet 2021-09) on how employers can claim these credits. Who is an eligible employer? An eligible employer is any business, including a tax-exempt organization, with fewer than 500 employees. An eligible employer also includes nonfederal governmental and nonfederal section 501(c)(1) organizations or agencies. Tax credits extended by ARPA Eligible employers that pay EPSL and/or EFML wages from April 1, 2021, to Sept. 30, 2021, not counting any leave taken prior to April 1, may take the tax credits on those wages. The following applies only to the period from April 1 through Sept. 30: The EPSL was effectively renewed by allowing employers to provide up to 80 additional hours of EPSL to employees (providing an additional benefit of up to $5,110). The benefit available under the EFML was increased by eliminating the requirement that the first two weeks of the 12-week EFML period be unpaid (providing an additional benefit of up to $2,000). For example, if an eligible employer offers employees a paid day off in order to be vaccinated, the employer can receive a tax credit equal to the wages paid to employees for that day up to the above limits.  Qualifying paid leave reasons expanded by ARPA For the period starting April 1, 2021, the ARPA expanded qualifying reasons for the EPSL and the EFML to include payments made to an employee: Receiving a COVID-19 vaccination, Recovering from side effects or injuries related to the COVID-19 vaccination, or  Seeking or waiting for results of a COVID-19 test, if the employee has either been exposed to COVID-19 or the employer requested the COVID-19 test. Claiming the tax credits The tax credits are available to eligible employers that pay sick and family leave wages from April 1, 2021, through Sept. 30, 2021. Both tax credits are refundable and count against the employer’s portion of Medicare tax. The credits can be claimed on the employer’s quarterly Forms 941. Employers can reduce their federal payroll tax deposits by the amount of their anticipated credit. Any amounts over and above the federal payroll tax liability are refundable on Forms 941. Form(s) 7200 can also be filed to claim and advance payment of the credit throughout each quarter. Self-employed individuals can claim the credits on their Form 1040 return. We encourage you to reach out to your Baker Tilly advisor regarding how the above may affect your tax situation.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Thanks to the American Rescue Plan Act certain employers will be eligible to receive tax credits for giving their employees paid time off to receive COVID-19 vaccinations. Not every organization qualifies, though. 

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Eligible employers can claim tax credits for giving workers paid leave to receive COVID-19 shots

Authored by Angelina Fadorsen The pandemic has brought a heightened awareness to the need for companies to have effective and efficient plans for potential disruption.  While the conversation of managing disruption in supply chain management is nothing new, it finally has earned the attention many believe it has needed for the past two or three decades. Many cases over the last year have shown first-hand that how companies deal with disruptions can make or break their future. Although the pandemic may be considered a black swan event when it comes to disrupting supply chain, that should not discount the importance of effective risk management and properly implemented business continuity plans. Failure to recognize and understand the risks your organization faces will likely lead to unnecessary disruptions and subsequent loss of profits. Even with the most structurally sound strategies in place, a supply chain company is destined for failure if it lacks a fully completed risk assessment and disaster plan.   Supply chain disruptions can come in various forms that affect companies differently depending on factors such as their location, their product and their supplies. A disruption can be defined as an unforeseen breakdown, malfunction or failure of one’s production and/or distribution that negatively impacts the supply chain process. So what disruptions should your supply chain management company plan for? That question might not have an easy answer, but companies can begin protecting their supply chain by planning for the risks currently trending which, according to DHL’s Resilince360 Annual Risk Report, include the following: Environmental Climate change has been a global concern and a growing risk as it relates to supply chain management for years. Climate change affects not only the intensity but also the frequency of large-scale natural disaster disruptions such as wildfires, tropical storms, droughts and hurricanes. From climate change comes tougher environmental regulations heavily affecting many of the production and distribution channels of supply chain companies. There are countless rulings issued by the Environmental Protection Agency, as well as numerous federal laws, and a growing number of global regulations that are becoming more stringent. Can you afford to keep emissions at the level they currently stand? Can you afford to lose a full day of power due to extreme flooding? Can you afford the switch to low-sulfur fuels to align with the International Maritime Organization (IMO) requirements? Can you afford to work at 1/8 capacity of your staff when evacuations are mandatory due to spreading forest fires? No one can completely eliminate the risks associated with climate change and environmental regulations, but everyone can effectively, efficiently and realistically plan for them with an appropriately implemented business continuity plan.  Locational How much trade risk your company faces has probably drastically changed just within these last few years. Not unlike climate change, trade risk has been an area of concern within supply chain management for years, but the growing potential of a full-scale trade war has created even more uncertainty in recent years.   Continuing uncertainty and increasing tensions as it relates to trade policy have made it impossible to determine a clear-cut answer for how to reduce the risk a company faces, but at the same time, can you afford to leave it unaddressed entirely? Probably not.  If recent times have taught us anything, it is that supply chain companies need to consider restructuring their manufacturing and overall operational composition. By adopting an end-to-end structure, supply chain management companies create complete visibility into their organization’s operations, allowing them to become more agile and to make real-time decisions when it comes increased/stricter tariffs, additional trading regulations, border disputes, etc. Political  Generally speaking, we can prepare for political changes, as we typically know when potential disruptions are coming – an election year, a voting month, a shift in party power, etc. You can typically plan for these bumps in the road.  Additionally, it is important to remember that just because your country might not be experiencing political unrest, you can still be greatly affected by other countries or areas that are. That’s the nature of supply chain. You need to be prepared at all times. And as you know, the list of potential issues across the globe is a lengthy one, from trade wars and tariffs to economic struggles and various types of sanctions. With this in mind, you should periodically adjust – or, at the minimum, revisit – your organization’s supply chain management goals and visions. This will help ensure that your company’s goals still align with and address the current political climate. Additionally, it will help ensure you have a well-balanced and mixed SCM plan that takes into consideration what is necessary for the organization’s survival in times of extreme political unrest – not just in your homeland but throughout the world.  Companies obviously cannot realistically and effectively plan for all possible disruptions – for instance, nobody saw a once-in-a-generation pandemic coming – but that should not interfere with adequately planning for those situations that may arise. With supply chain being an ever-changing industry, companies need to ensure they are continually monitoring, sufficiently preparing for, and taking appropriate action on the risks that affect them the most. Managing disruption is not a sprint, but a marathon. Proactive and continual risk management is the key to creating long-term success for any supply chain management company. Failure to do so will quickly create an insolvent company that is unable to recover from the lack of planning for risk and disruption. How Baker Tilly can help Baker Tilly is deeply experienced in the circumstances surrounding supply chain management disruption caused by the factors mentioned above, as well as other unforeseen situations. We can assist your company with risk framework, risk assessment, business continuity planning, regulatory compliance assessment and review, supply chain analytics and overall strategy, planning and optimization. Connect with a member of Baker Tilly’s supply chain team to discuss how our Value Architects™ can help you prepare now, for tomorrow.

Supply chain disruptions can come in various forms that affect companies differently depending on factors such as their location, their product and their supplies. Read this article to learn how your company can begin protecting your supply chain by planning for environmental, locational and political risks currently trending. 

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Authored by Paul Dillon, Michelle Hobbs and Mike Schiavo In an effort to provide continuing relief to businesses from the economic impact of the COVID-19 pandemic, the IRS extended penalty relief for certain employers who failed to timely deposit employment taxes.  Certain payroll-related credits enacted in the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act were extended via the Tax Relief Act of 2020 and the American Rescue Plan Act of 2021. Collectively, these Acts allow employers to claim refundable credits to offset employment taxes for qualified sick and family leave wages (FFCRA), actual wages paid to employees during partial or complete government-imposed business suspensions (employee retention credit or “ERC”) as well as qualified health plan expenses allocable to such wages. These credits permit employers to instead use cash to continue paying wages and other costs during government-imposed closures. Employers reducing their employment tax deposits in anticipation of receipt of any or all of the following credits will not be liable for failure to deposit penalties. Paid sick and family leave credits with respect to qualified leave wages paid from Jan. 1, 2021, through Sept. 30, 2021; The ERC with respect to qualified wages paid beginning Jan. 1, 2021, and ending Dec. 31, 2021; and The COBRA credit for coverage from April 1, 2021, and ending Sept. 30, 2021. In other words, when making federal payroll deposits, employers may compute the total amount of the employment tax liability and reduce it by the amount of the anticipated payroll tax credits listed above.  The guidance indicates an employer would not be subject to a penalty for failing to deposit employment taxes if specified requirements are met, including that the employer did not seek payment of an advance credit for the anticipated credits it relied on to reduce its deposits. The relief ensures that eligible employers may pay qualified sick leave wages and qualified family leave wages, qualified wages and COBRA continuation coverage premiums using employment taxes that would otherwise be required to be deposited without incurring a failure-to-deposit penalty. Please see further stimulus coverage on our website for details on these payroll tax credits and other relief programs.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

New guidance from the IRS says it will not subject certain employers to penalties for failing to deposit employment taxes as long as they meet specified requirements. 

IRS provides additional penalty relief for payroll tax deposits

Baker Tilly and NACD: 2021 Governance Outlook Projections on Emerging Board Matters Baker Tilly and the National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 20,000 board members, released the 2021 Governance Outlook: Projections on Emerging Board Matters, featuring Baker Tilly’s 2021 Strategic Risks for Boards. The outlook is designed to give corporate directors and senior executives a comprehensive overview of major business and governance issues likely to demand board focus over the coming year. Baker Tilly’s 2021 Strategic Risks for Boards focuses on three key risks facing organizations resulting from challenges of the COVID-19 pandemic, including questions directors should ask themselves. Financial resiliency  Is our strategy still appropriate considering all that we have already experienced and our projections for 2021? Do we need to consider mergers and acquisition (M&A) targets, divestiture of certain business units, or layoffs or furloughs, not only from a strategic perspective but also with an eye toward reputational risk? Does the organization have the appropriate capital structure and resources to execute its plans? Supply chain Do we as the governing board have a clear picture of all supply-chain tiers to ensure resiliency? What measures have the organization's leaders put in place to ensure that the business is not affected in the same manner if a systemic disruption happens in the future? Workforce issues Does the organization have the right talent-management system in place, including up-to-date talent profiles, to support any changes to the work-force that may be necessary to handle a COVID-19–type situation in the future? What did we learn from the pandemic slowdown in terms of hiring practices and flexible work arrangements that should be permanently incorporated into the HR strategy? The report also highlights NACD survey findings about leading board priorities for 2021.
Baker Tilly – NACD BoardTalk blog article: Evolve Risk-oriented Roles and Their Effectiveness Using the Three Lines Model Authored by Raina Rose Tagle No matter the size or industry, every organization manages risk and pursues compliance to some extent—but how effectively? The Three Lines Model helps leadership, including boards of directors, see the delineation of roles and responsibilities along the “three lines”: day-to-day management, risk oversight and monitoring functions, and risk assurance-oriented functions, such as internal audit. It also provides a customizable framework upon which to build your organizational understanding of and approach to risk management and monitoring functions.
Baker Tilly – NACD BoardTalk blog article: Directors Talk Post-Breach Processes After a cyber breach, it’s too late for “should haves”—but there’s still a chance for your company to respond quickly and appropriately to mitigate reputational and regulatory fallout. A recent roundtable cohosted by NACD and Baker Tilly in Chicago discussed specific post-breach considerations that boards should plan for include: ­Escalation ­Public response ­Regulatory restraints ­D&O insurance ­Ask questions

Eligible employers can claim tax credits for giving workers paid leave to receive COVID-19 shots

Navigating and managing disruption in supply chain management

IRS provides additional penalty relief for payroll tax deposits

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Eligible employers can claim tax credits for giving workers paid leave to receive COVID-19 shots

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