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Variety of tax provisions included in law passed over the holidays

The “Further Consolidated Appropriations Act, 2020” was signed into law on December 20, 2019, and includes a variety of provisions that provided tax relief to businesses and employers. The new law includes an extension (generally through 2020) of more than 30 provisions that were set to expire or already expired. Two other laws were passed as part of the law (The Taxpayer Certainty and Disaster Tax Relief Act of 2019 and the Setting Every Community Up for Retirement Enhancement Act).

Here are 4 of the highlights of items being extended and repealed

Extended – The employer tax credit for paid family and medical leave

This tax credit permits eligible employers to claim an elective general business credit based on wages paid to qualifying employees with respect to family and medical leave. The credit is equal to 12.5% of eligible wages if payment if 50% of such wages. The credit is increased by 0.25 percentage points (maximum of 25%) for each percentage point that the rate of payment exceeds 50%. The maximum leave amount that can be taken into account for a qualifying employee is 12 weeks per year.

This credit was set to expire at the end of 2019 and now has been extended through 2020.

Extended – The Work Opportunity Tax Credit (WOTC)

The Work Opportunity Credit provides businesses with an incentive to hire individuals who are members of one or more of 10 targeted groups.  These individuals have consistently faced significant barriers to employment (e.g., veterans, ex-felons, summer youth, SSI recipients and resident of an empowerment zone or enterprise community).  

The new law extends this credit through 2020.   

Repealed – “Cadillac” excise tax on high-cost employer-sponsored health plans

The Affordable Care Act (ACA) contained a provision that added a nondeductible excise tax on insurers when the aggregate value of employer-sponsored health insurance coverage for an employee, former employee, surviving spouse or other primary insured individual exceeded a threshold amount. This tax is commonly referred to as the tax on “Cadillac” plans.

The new law repeals the Cadillac tax for tax years beginning after December 31, 2019.

Repealed – The Medical Device Excise Tax (MDET)

The ACA also contained a provision that required that the sale of a taxable medical device by the manufacturer, producer or importer be subject to a tax equal to 2.3% of the price for which it is sold. This medical device excise tax originally applied to sales of taxable medical devices after December 31, 2012.

The new law repeals the excise tax for sales occurring after December 31, 2019.

Stay tuned

These are only some of the provisions of the new law.  Additional articles will be shared soon on other important tax lax law changes for 2020.  If you have any questions about the ones mentioned or want to know about other provisions, please contact your Wegner CPAs tax specialist.

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