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President Signs UI Tax Relief Legislation for Non-Profits (ILSHRM Legislative Update)

    August 5, 2020

    ILSHRM Legislative Update:

    After being passed by unanimous consent by the US Senate and the US House or Representatives, President Trump on August 3, 2020 signed the Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 (S 4209) into law.

    The new law provides a much-needed fix to help reimbursing employers (non-profits, school districts, local government units) manage the required  payments in lieu of contributions charged to their accounts for unemployment compensation.

    This remarkable bi-partisan action by both houses was the product of significant work by reimbursing employer groups, UWC, and the Republican and Democrat congressional staffs who recognized the problem and worked together to provide a legislative solution.  

    The CARES Act provided relief for reimbursing employers to help offset the costs of unemployment benefits by 50%. The U.S. Department of Labor guidance interpreted the CARES Act to require that  states collect 100% of the amount owed by reimbursing employers up front before providing the 50% credit. S 4209 clarifies that states may simply apply the 50% credit on the front end in charging reimbursing employer accounts.

    This reduces administrative cost for employers and states and provides relief for reimbursing employers that may not have the resources to immediately pay the full 100% payment because of the unprecedented increase in benefits from COVID-19 related claims.

    The US Department of Labor is finalizing guidance to states for the administration of the new Act.

    Next step is for Congress and the President to address the significant trust fund deficits and the subsequent, unprecedented increase in unemployment taxes that will hit Illinois employers for years to come. The Illinois Chamber has signed onto a letter with other business groups and organized labor to Illinois’ Congressional Delegation urging them to address the Illinois UI Trust Fund deficit caused by government shut downs. Also, we recently signed onto a similar letter to Congressional leaders in the Senate and House with state chambers and other statewide business groups from 22 other states. Finally, we have contacted Cong. Darin LaHood (R-Peoria), a member of the House Ways & Means Committee, seeking his help to get attention to the issue.

    Source: Jay Dee F. Shattuck, CAE


    Shattuck & Associates Consulting, Inc.