HR Alert: Tax Credits for Vaccine Leave?

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As we previously blogged, the American Rescue Plan, signed by President Biden on March 11, 2021, added additional reasons for qualifying leave under the Families First Coronavirus Relief Act (FFCRA). The FFCRA provides a withholding tax credit to employers with 500 or fewer employees when an employee must take time off of work due to COVID-19-related qualifying reason. The American Rescue Plan added the time to receive a COVID-19 vaccine and for reactions or compilations from the vaccine as one of those reasons.

As we’ve touched on before, New York COVID-19 leave, which remains in effect, requires employers to provide paid leave for qualifying reasons similar (but not identical) to those under the FFCRA, including for quarantining and isolating due to exposure to or a a positive COVID-19 test result.  And, as we’ve discussed, all New York employers are required to provide at least four hours of paid leave for each vaccine injection, separate from any other paid time off.

As a result, New York employers with 500 or fewer employees who opt in to the FFCRA (which now is voluntary through the end of September 2021) are eligible to receive dollar-for-dollar withholding tax credits for any COVID-related leave that’s paid to employees.

But can you opt in to FFCRA benefits for just for employees obtaining a vaccine? We’ll get all lawyerly on you here and tell you that the answer is a solid MAYBE.

Unfortunately, the law is unclear on this point. Yet, if you’re obligated under New York law to give paid sick and vaccine leave, then why wouldn’t you opt into FFCRA in order to get the tax credit?  It just makes financial sense, right? Yes and no. Remember that the FFCRA requires employers to give leave for child care, too. New York law doesn’t. So if you opt in to FFCRA to get the tax credits, you’re likely stuck giving COVID-related child care leave to your employees, if they qualify. Those absences from work can add up, of course, and sometimes undermine the smooth operations of your company.

If you choose to opt in to FFCRA, remember to document the COVID-related reason for the paid leave – the IRS will be looking for this if you’re audited. We can help with the necessary certification document – just give us a call.

Lisa Coppola

Written by Lisa Coppola

Founder of The Coppola Firm

Lisa A. Coppola, Esq. understands the challenges her clients face, whether they’re starting a new business, taking their existing operations in a new direction, or facing a claim or threat.

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