Employment: employer contributions: employee withholdings: COVID-19 regulatory compliance credit.
The implementation of SB 375 is expected to have a significant financial impact on employers by reducing their total tax liabilities associated with employee wage withholdings. Specifically, the bill stipulates that the credit must be claimed on the employer's last quarterly return of the relevant calendar year, thus directly offsetting the personal income taxes that would otherwise be withheld from employees. Notably, the bill indicates that it does not alter the overall amount of personal income tax to be withheld from employees or their liability, meaning the intent is not to diminish state tax revenues but to offer relief during a transitional period for businesses.
Senate Bill 375, introduced by Senator Alvarado-Gil, aims to provide a COVID-19 regulatory compliance credit for employers during the years 2023 and 2024. This credit allows employers to claim specific amounts based on the verifiable costs incurred in complying with health regulations related to COVID-19. The credit is designed to alleviate some financial burdens on businesses that had to adapt to new health and safety standards during the pandemic. Employers with 100 or more employees could receive up to $50 per employee, while those with fewer than 100 employees are eligible for up to $100 per employee, reinforcing support for smaller businesses.
While the bill primarily seeks to support employers post-COVID-19, there may be concerns regarding the logistical implications of its implementation. Critics could argue about the necessity of such tax credits, questioning whether they inadvertently favor larger employers over smaller businesses that do not reach the thresholds for the maximum credits available. Additionally, the sunset clause of the bill, as it is set to be repealed on December 1, 2025, raises questions about the long-term viability of such tax credits and whether they effectively encourage sustained compliance with health regulations beyond the immediate impacts of the pandemic.