A new, temporary tax credit for businesses that purchase safety equipment, supplies, and training to mitigate employee and customer exposure to COVID-19 is one of the few widely popular pandemic relief provisions still under discussion in Congress. It isn’t a panacea for businesses that are still struggling to adjust and stay afloat, but it’s an important step in fully reopening businesses that limited their operations.
The key features of the healthy workplace tax credit were laid out in a bill (H.R. 7615) introduced in July by House Ways and Means Committee member Tom Rice, R-S.C. Under that proposal, an employer would receive a credit against employment taxes each quarter equal to 50 percent of the amount spent on qualified employee protection expenses, qualified workplace reconfiguration expenses, and qualified workplace technology expenses. The credit would be refundable to the extent that it exceeds the employer-side payroll tax obligations and available for expenses paid or incurred during the quarter. It has a per-employee cap of $1,000 for up to 500 employees, $750 for the next 500 employees, and $500 for any employees over 1,000. Senate Finance Committee member Rob Portman, R-Ohio, introduced a similar measure on July 20 (S. 4214) and Sen. Ted Cruz, R-Texas, included it in his recent bill (S. 4537).
Qualified employee protection expenses include testing for employees, personal protective equipment, and cleaning products or services for preventing the spread of COVID-19. Obtaining the credit for these items should be straightforward because the proposed statutory language is reasonably specific on what’s covered — “employee protection expenses” means personal items including masks, gloves, and disinfectants, for example — and the IRS could put out guidance with a list of even more specific items that it will accept as qualifying for the credit.