For employers, the law excludes from Massachusetts gross income the forgiveness of a Paycheck Protection Program loan under the 2020 federal CARES Act. The law includes several tax relief provisions for both employers and employees. The rate for the assessment is intended to cover the principal, interest and expenses associated with the bonds. For any year in which such bonds are outstanding, employers are subject to an unemployment obligation assessment. The new law permits the Commonwealth to issue bonds to help replenish the unemployment fund. On September 30 of each calendar year, amounts which were not used to pay federal loan interest may be transferred to the unemployment compensation fund. The receipts from the excise will be deposited in a separate fund known as the Federal Loan Interest Fund and will be used to pay interest on federal loans to the fund. The excise rate will be determined by an employer’s reserve percentage in the unemployment compensation fund. However, the law requires employers that make unemployment contributions to pay a new excise on wages for the period of Januthrough December 31, 2022. Absent this change, contribution rates would have increased dramatically in 20 due to the impact of the high rate of unemployment attributed to COVID-19 on the unemployment compensation fund. The law provides that for calendar years 20, employers’ contribution rates into the unemployment compensation fund will remain at their 2020 levels. Among other provisions, the law addresses the solvency of the unemployment compensation fund and includes tax relief for employees and employers. On April 1, 2021, Massachusetts Governor Charlie Baker signed into a law an Act Financing a Program for Improvements to the Unemployment Insurance Trust Fund and Providing Relief to Employers and Workers in the Commonwealth. Governor Baker supports this provision, but has recommended several revisions to the bill, including varying the compensation rate for different types of emergency sick leave and the establishment of a flat tax credit per employee. The sick leave provisions would have required employers to provide COVID-19 emergency paid sick leave for absences related to COVID-19 or the vaccine. While the unemployment and tax relief provisions of the bill are now law, the Governor exercised his line-item veto power to send the section of the bill mandating COVID-19 emergency sick leave back to the Legislature with recommended amendments. The law also includes tax relief provisions for employers and employees, including gross income exclusions for employers who received certain COVID-19 relief benefits and a tax deduction for some individuals who received unemployment compensation in 2020 or 2021. Seyfarth Synopsis: On April 1, 2021, Massachusetts Governor Charlie Baker signed a new law that, among other issues, addresses the solvency of the Commonwealth’s unemployment compensation fund by imposing an excise on wages and permitting the Commonwealth to issue bonds to fund unemployment.
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