COVID-19 Section 139 Disaster Relief Payments

This article highlights the provisions of Section 139 Disaster Relief Payments (recently expanded in the Families First Coronavirus Response Act) and provides information on setting up an appropriate earning code in Namely Payroll to handle such payments.

Overview

On March 14, 2020, Congress passed the Families First Coronavirus Response Act, which expands the application of Section 139 Disaster Relief Payments. Section 139 payments can now be used to pay employees who are suffering hardship from COVID-19. Some expenses that may fall into the scope of this new legislation include temporary housing, medical bills, food, funeral expenses, and more. For more details on covered expenses, read H.R. 6201.

These payments are exempt from all employer and employee Federal, State, and Local Taxes (with the exception of the state of Arkansas), and are deductible business expenses for an employer. Please note: these payments are intended for hardships related to COVID-19 and are not supposed to be used to substitute regularly earned wages.

Namely has implemented an earning code, Disaster Relief - Section 139 for use for these expenses. The code will capture the appropriate taxability when used to pay an employee.

 

FAQs

As an employer, am I mandated or obligated to give these earnings to any of my employees?

No - you are not mandated or obligated to distribute these earnings to any of your employees; it is relief that you have the option of extending to them in their time of need.

 

The employee I am paying is not in the state of Arkansas. Will this employee be taxed for this earning, and will my organization have to pay any employer taxes?

No - your employee will not be taxed for this earning, and there will not be any employer taxes associated with this earning either.

 

The employee I am paying is in the state of Arkansas. Will this employee be taxed for this earning, and will my organization have to pay any employer taxes?

Yes - your employee will need to pay Arkansas State Income Tax, and if your employee has not yet hit the Arkansas SUI Taxable wage limit, your organization will need to pay Arkansas SUI taxes for this earning, too.

 

What is the name of the earning I should use when I am distributing Section 139 payments?

Please use the Disaster Relief - Section 139 earning code.

 

When will this earning be available in Namely?

This earning is available to be used in Namely today.