The IRS published news release IR-2020-57 on March 20, 2020, which states that “small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act, signed by President Trump on March 18, 2020”.
This legislation will assist businesses (with less than 500 employees) with providing employees with paid leave and keeping them on their payrolls. The goal is to ensure employees are not stuck choosing between working and staying home to help flatten the curve. See below for key takeaways on the Families First Coronavirus Response Act.
Paid Sick Leave for Workers: For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.
Complete Coverage: Employers receive 100% reimbursement for paid leave pursuant to the Act.
Health insurance costs are also included in the credit.
Employers face no payroll tax liability.
Self-employed individuals receive an equivalent credit.
Fast Funds: Reimbursement will be quick and easy to obtain.
An immediate dollar-for-dollar tax offset against payroll taxes will be provided
Where a refund is owed, the IRS will send the refund as quickly as possible.
Small Business Protection: Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.
Easing Compliance: Requirements subject to 30-day non-enforcement period for good faith compliance efforts.
According to the IRS, for businesses to take advantage of the paid leave credits, they “…can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week”.
Check out our COVID-19 Resources page for more information.
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