In this edition:

Payroll Tax Credit Guidance • COBRA Premium Assistance •
Head Start COVID-19 Flexibilities • Head Start Supplemental Funds • 
CDC Eviction Moratorium Update • OCS/CDC Vaccine Webinar

IRS Guidance on Tax Credits for FFCRA Leave,
Employee Retention, and COBRA

Three major forms of COVID-19 relief—reimbursement for paid sick and family leave wages, the employee retention credit, and COBRA premium subsidies—have taken the form of payroll tax credits, which has left some CAAs wondering how to take advantage of multiple benefits. On April 13, the IRS issued new guidance that provides some insight into what the process of claiming the credits should look like. The guidance reiterates that each employment tax credit may be claimed by deducting the amount of the credit for which the employer is eligible from the amount due on its Form 941 quarterly tax return.

The guidance also extends the existing waiver of penalties for employers that do not deposit employment taxes in a timely manner because they expect their COVID-19 related payroll tax credits to exceed their employment tax liability for that quarter. To qualify for the waiver, the following conditions must be met:

1. The employer must have paid qualified leave wages, qualified health plan expenses, qualified retention wages, or covered COBRA premiums in the calendar quarter prior to the time of the required deposit;
2. The amount of employment taxes that the employer does not timely deposit is less than or equal to the amount of the employer’s anticipated Families First Coronavirus Relief Act (FFCRA) credits, employee retention credits, and COBRA premium assistance credit amounts; and
3. The employer must not have filed a Form 7200 to request advance payment of the same anticipated FFCRA, employee retention, or COBRA credits it used to reduce its deposit for that quarter.

After deducting the credits, an employer can file Form 7200 to request an advance of any amounts by which the credits exceed the employer’s remaining employment tax deposit amount. Alternatively, the employer can wait and claim a refund on its annual employment tax return.

OHS Issues Guidance on $1B Supplement

On May 4, 2021, the Office of Head Start (OHS) issued a Head Start Program Instruction (ACF-PI-HS-21-03) regarding the additional $1 billion in Head Start funding authorized under the American Rescue Plan. All current Head Start, Early Head Start, and Early Head Start-Child Care Partnership grantees are eligible to receive additional funds proportionally based on funded enrollment levels and may do so via the Head Start Enterprise System.

The Program Instruction (PI) lists a number of potential activities for which this new funding may be used. Grantees are encouraged to prioritize providing additional Head Start and Early Head Start programming by extending the school year or running summer programs, focusing on rising kindergartners, children with disabilities, children experiencing food or housing insecurity, and children that were not able to receive any in-person services this year. The PI also notes that grantees have flexibility to use the additional funding to make one-time investments to support the needs of staff, children, and families. Other possible uses of the funding include engaging in activities related to family and community outreach, preparing facilities for in-person services, and providing services to support Head Start employees.

The PI also clarifies that OHS will approve requests for waivers of non-federal match for Head Start funds awarded under the American Rescue Plan. To request a waiver of a non-federal match, Head Start programs are directed to enter $0 in SF-424A Section C of their application for additional funds. No further justification is required.

OHS also continues to update its Early Childhood Learning and Knowledge Center (ECLKC) website with information about the COVID-19 pandemic and its effect on the Head Start community.

Federal Court Strikes Down CDC Eviction Moratorium

On Wednesday, May 5, 2021, the U.S. District Court for the District of Columbia (DC) struck down the national eviction moratorium put in place by the U.S. Centers for Disease Control (CDC) and the Department of Health and Human services (HHS). The court reasoned that the implementation of the moratorium exceeded the authority of HHS to combat the COVID-19 pandemic as granted by the Public Health Service Act, despite Congress’s intent to give HHS wide discretion.

As of this writing, the full impact of this ruling on the CDC’s national federal-level eviction moratorium is unclear. Two other federal district court judges have ruled in favor of the CDC’s moratorium (the Western District of Louisiana and the Northern District of Georgia), and the ruling does not necessarily bind state housing court judges. Furthermore, the DC court has agreed to put a temporary hold on its ruling in response to the Justice Department’s request for an emergency hold on the ruling during the appeals process in consideration of the public health hazards posed by new, unchecked evictions. While the court has not ruled on the merits of the Department’s request, it has given the case’s plaintiffs until May 12 to formally oppose the delay.

It should also be noted that this ruling has no effect on state-level eviction moratoriums.

Legal challenges notwithstanding, the CDC’s eviction moratorium is currently set to expire on June 30, 2021. Concerned CAAs should check in with local counsel to confirm the status of any state-level eviction moratoriums, if any exist, as well as to confirm whether any applicable state and/or federal district courts have supported or struck down the CDC’s moratorium. CAPLAW will continue to monitor the status of this ruling as the appeals process plays out.

A Discussion with OCS and CDC:
Understanding CDC's Vaccine Confidence Strategy

The CDC and OCS are hosting this webinar to help the Community Action network make sure it has the latest COVID-19 mitigation resources available in regard to health equity. Substantial evidence shows that communities of color have experienced significantly higher rates of infection and mortality due to COVID-19 when compared to white Americans. In light of longstanding structural and racial inequities, the CDC and OCS are looking to the Community Action network, as trusted messengers, to assist in employing a multifaceted approach in support of disenfranchised communities of color.

Date: Tuesday, May 11, 2021
Time: 2:00 PM ET

This Legal Update is part of the CARES Community Services Block Grant (CSBG) Legal Training and Technical Assistance (T/TA) Center. It was created by Community Action Program Legal Services, Inc. (CAPLAW) in the performance of the U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services Cooperative Agreement – Grant Award Number 90ET0467-03-C3. Any opinion, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Health and Human Services, Administration for Children and Families.

The contents of this publication are intended to convey general information only and do not constitute legal advice. Any communication through this publication or through CAPLAW’s website does not constitute or create an attorney-client relationship. If you need legal advice, please contact CAPLAW or another attorney directly.