By Payroll and Entitlements Editorial Staff
The purpose of this UIPL is to provide states with instructions for implementing the recent statutory changes to the emergency unemployment relief for state and local governmental entities, certain nonprofit organizations, and federally recognized Indian tribes provided in the Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 (“Protecting Nonprofits Act”), Public Law 116-151, which amends Section 903(i) of the Social Security Act. Section 903(i) was created by Section 2103 of the CARES Act.
Background. On March 27, 2020, Section 903(i) was added to the Social Security Act, providing emergency relief by way of reimbursement for amounts owed by state and local governmental entities, certain nonprofit organizations, and federally recognized Indian Tribes (“reimbursing employers”). On August 3, 2020, the President signed into law the Protecting Nonprofits Act, which amends Section 903(i) by changing the method of emergency relief provided to reimbursing employers, and makes a small number of technical amendments. UIPL 18-20, Change 1, discusses the amendments made by the Protecting Nonprofits Act and provides operating guidance to states.
What the amendments do. Under the amendments made by the Protecting Nonprofits Act, after August 3, 2020, states are required to use the transfer of federal funds provided under Section 903(i) exclusively to reduce the amount required to be paid by reimbursing employers in lieu of contributions. Thus, a state may reduce the amount required to be paid in lieu of contributions by up to 50 percent of the amount of compensation paid before providing the employer with a bill for any remaining amount owed. (Attachment I provides the statutory language.)
The Protecting Nonprofits Act also eliminates the requirement described in UIPL No. 18-20 that reimbursing employers must first pay the amount due in lieu of contributions to obtain emergency relief with the federal funds provided under Section 903(i).
The guidance discusses the impact of the changes made in the Protecting Nonprofits Act and Attachment II of the UIPL provides four examples demonstrating the practical effects of such emergency relief to reimbursing employers.
In addition, the amendment allows the transfer of funds from the Federal Unemployment Account to occur after December 31, 2020, to provide emergency relief for benefits paid during the applicable period (UIPL 18-20, Change 1, August 12, 2020).
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