In a previous Legal Alert, which can be accessed here, we summarized the new leave requirements contained in HR 6201, the Families First Coronavirus Response Act (FFCRA). As noted in that prior legal alert, the FFCRA extends tax credits to employers for the paid leave employers provide to employees pursuant to the Act.
On March 20, 2020, the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (DOL) announced that small and midsize employers will have the ability to access two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing COVID-19 related leave to their employees. According to the announcement by the three named departments, a guidance will issue next week that will permit eligible employers to retain an amount of their otherwise required payroll taxes in an amount that equals the amount paid for COVID-19 leave that they paid, rather than depositing it with the IRS. Applicable payroll taxes include federal income tax withholdings, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes, with respect to all employees. If there are not sufficient payroll taxes to cover the cost of COVID-19 leave, employers will be able to file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less.
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As soon as the guidance issues next week, we will update this alert to provide further details. Kronick attorneys across all of the firm’s practice groups – Natural Resources, Public Agencies, Labor & Employment, and Business/Healthcare – will continue to provide clients and the community with ongoing updates and advice regarding COVID-19 related issues as developments warrant. Please feel free to contact us for assistance with issues arising from the current health crisis.