Apr 3, 2020
Under the Families First Coronavirus Response Act (“FFCRA”), signed by President Trump on March 18, 2020, employers with less than 500 employees (“Eligible Employers”) are generally required to provide up to 80 hours of paid sick leave to an employee for coronavirus-related care of the employee or their family members and additional 10 weeks of paid leave at two-thirds of the employee’s pay to care for their child due to a coronavirus-related school closing or child care unavailability. On March 20, 2020 the IRS and the U.S. Department of Labor jointly announced a refundable payroll tax credit in the form of an offset to payroll tax liability designed to immediately reimburse Eligible Employers for the cost of providing FFCRA mandated coronavirus-related paid leave to their employees.
Credit Amount and Offset Against Payroll Tax Liability
The credit equals 100% of the Eligible Employer’s cost of paid leave under the FFCRA. The credit will be in the form of a dollar-for-dollar offset against the Eligible Employer’s payroll taxes. If the cost of an Eligible Employer’s FFCRA related paid leave exceeds the payroll taxes due, the IRS states that such employer can seek an expedited advance from the IRS by submitting a streamlined claim form that it will make available. The IRS mentions that it expects to process these requests in two weeks or less.
Examples
The announcement contains the following examples to help illustrate the operation of these credits and refunds.
Self-Employed Individuals Will Also Receive Credits
Self-employed individuals will be able to claim similar credits on their income tax returns which will reduce their estimated tax payments.
For additional information or assistance with the applicability and effect of this development, please contact any of the listed Roetzel attorneys.