Enables Employers to Help Employees Address COVID-19 Expenses
Namely, the leading HR platform for mid-sized companies confirmed its Section 139 payment functionality. Section 139 of the U.S. Internal Revenue Code allows employers to make certain qualified disaster relief payments to employees that are tax-advantaged. In response to the categorization of the pandemic as a national emergency, Section 139 disaster relief payments have escalated in relevancy given the impact of COVID-19 on the workforce. Additionally, the March 2020 Families First Coronavirus Response Act expanded the application of these tax-free payments, giving employers the ability to reimburse or pay employees for “reasonable and necessary personal, family, living, or funeral expenses” incurred as a result of COVID-19.
Section 139 was initially enacted after 9/11 to encourage relief payments to individuals affected by a disaster. Exempt from all employer and employee Federal, State, and Local Taxes (with the exception of the state of Arkansas), these payments are deductible business expenses for an employer. To ensure Namely customers can capture the appropriate taxability when paying an employee, a rules-based payroll earning code has been established in the Namely system.
Organizations are leveraging Section 139 “care cards” to assist employees with medical expenses not compensated for by insurance, the cost of over-the-counter medications, and the costs associated with enabling employees to work from homes such as office supplies and increased cell phone costs. When administered through Namely, Larry the corresponding tax benefits are properly structured and tracked.
Larry Dunivan, CEO of Namely, commented, “Managing the workforce across multiple states during a national pandemic is fraught with complexities and concerns. Section 139 was originally legislated for the worst of times and given the impact of the coronavirus, has moved to the forefront for those employers seeking to assist their employees during this time of extreme need.”