Coronavirus-related paid leave for workers and tax credits for small and midsize businesses

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Small and midsize employers can soon 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 COVID-19 relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act, signed March 18, 2020.

To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not enough to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will soon be released.

Key takeaways:

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 under the FFCR.
    • 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.

IRS