We recently posted about the Families First Coronavirus Response Act (FFCRA) which places financial burden on employers who are required to provide up to 80 hours of paid sick leave to eligible employees, and in some circumstances up to ten weeks of paid leave. In response, many employers are asking us
The answer, or at least some relief, may be available in the form of a tax credit. According to the IRS, certain small and mid-size employers will be able to use refundable payroll tax credits to cover the costs associated with FFCRA.
As employers know, when they pay their employees there are required federal withholdings that the employer must deposit with the IRS along with the employer’s share of Social Security and Medicare taxes. We’re expecting additional guidance to be released soon that will permit eligible employers who pay qualifying sick or child-care leave pursuant to the FFCRA to retain the costs of the paid leave from their payroll taxes rather than deposit them with the IRS.
If there aren’t sufficient payroll taxes to cover the cost of the paid FFCRA leave, eligible employers will be permitted to file a request for an accelerated payment from the IRS which the IRS expects to process within two weeks or less. The details of this new, expedited procedure are expected to be announced next week.
We’ll continue to report on this development when the new guidance becomes available. In the meantime, if you’re an employer with questions about navigating COVID-19 and its many changes to your State and federal employment obligations, contact us. Our team of experienced attorneys is available to help you.