A bipartisan group of lawmakers, including the chairmen of the tax-writing committees in the House and the Senate, asked the Internal Revenue Service yesterday to allow companies that continue paying the cost of health benefits for furloughed workers to remain eligible for a new tax credit, the New York Times reported. At issue is a tax credit for retaining employees, which essentially reimburses companies for as much as half the wages they continue to pay workers who are furloughed amid the coronavirus pandemic. The credit, which is meant to encourage companies to keep paying employees amid virus-induced shutdowns, was included in an economic rescue package that passed Congress with bipartisan support and was signed into law by President Trump in March. The lawmakers’ concern stems from guidance that IRS officials issued governing which companies are eligible for the credit’s benefits, and to what degree. That guidance allows companies to qualify if they reduce employees’ hours — and thus, their pay — amid the pandemic, but do not lay them off entirely. But it rules out benefits for companies that stop paying wages to their workers but continue to pay the cost of their health benefits. If a company “is not paying wages to its employees for time that the employees are not providing services,” the guidance states, “it may not treat any portion of the health plan expenses as qualified wages.” Lawmakers yesterday objected to that finding. In a letter to the IRS, Senate Finance Committee chair Charles E. Grassley (R-Iowa) along with the top Democrat on the committee, Senator Ron Wyden of Oregon, and Rep. Richard E. Neal (D-Mass.), House Ways and Means Committee chairman, said that finding runs counter to the clear intent that members of Congress had expressed in crafting the law. “The economic contraction caused by the pandemic has resulted in over 30 million unemployment claims, making incentives that retain the connection to employment and employee benefits critical,” the lawmakers wrote. “After the passage of the CARES Act, we reiterated this intent in subsequent communications with Treasury.”
