Immediate clarification on whether federal credit unions are able to access payroll tax credits in COVID-19 relief legislation is needed, Reps. Linda Sanchez (D-Calif.) and Ron Estes (R-Kansas) wrote to Treasury Secretary Steven Mnuchin Tuesday. The credits include paid sick leave and required paid family leave from the Families First Coronavirus Response Act as well as the employee retention credit in the CARES Act.
The legislative language states the credits are not available to “certain governmental employers” but Sanchez and Estes are concerned the language unintentionally includes federal credit unions.
“The text of the ‘federal instrumentality’ exclusions seem to indicate that the prohibition on receiving the credits was aimed at governmental entities, not federal credit unions. That was certainly our intention when supporting enactment of these bills,” they write. “However, your clarification is needed to prevent federally-chartered credit unions from being the only not-for-profit entities that are prohibited from receiving this relief. Incidentally, state-chartered credit unions (Section 501(c)(14)(A) of the Internal Revenue Code) are not prohibited from claiming these three payroll tax credits. It would seem inconsistent to prohibit federal credit unions from receiving access to the same programs.”
The legislators also note the importance that credit unions be allowed to serve members affected by the pandemic more efficiently, without unintentional interference.
“Local credit unions continue to assist families and small businesses on the front lines of the pandemic. It is our hope to not create additional burdens on these organizations as they plan for their internal operating expenses. Your immediate clarification on this issue would be very helpful,” they write.