How Emergency FMLA and Sick Leave IRS Tax Credits Are To Work

Among the paid-leave requirements under the FFCRA:

• Eligible employers must provide two weeks (up to 80 hours) of paid sick leave at 100 percent of an employee’s pay if the employee is unable to work because he or she is quarantined or experiencing symptoms associated with COVID-19 and seeking a medical diagnosis.

• Eligible employers must provide two weeks (up to 80 hours) of paid sick leave at two-thirds of an employee’s pay if he or she is unable to work because of a need to care for someone subject to quarantine, if he or she must be absent to care for a child whose school is closed or whose child care provider is unavailable for reasons related to COVID-19, or if the employee is experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services.

• In certain circumstances, employees who are unable to work because of a need to care for a child whose school is closed or whose child care provider is unavailable may receive up to an additional 10 weeks of paid leave at two-thirds of the employee’s pay.

Employers are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or for whom child care is unavailable if the viability of the business would be threatened by doing so.

The IRS has given these examples of how the new guidance would work:

• If an eligible employer pays $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

• If an eligible employer pays $10,000 in sick leave and is otherwise required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and could file a request for an accelerated credit for the remaining $2,000.

The IRS will post more information about these credits, once available, on its Coronavirus Tax Relief page. Eligible employers will be able to claim these credits based on qualifying leave they provide between April 1 and Dec. 31, 2020.

Equivalent credits are available to self-employed individuals who become ill or must care for a family member.

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