IRS Issues Guidance on Tax Credits for Coronavirus Paid Leave


Small and midsize employers may begin using two new refundable payroll tax credits to obtain reimbursement for the costs of providing coronavirus-related leave to their employees, the U.S. Department of Labor (DOL) and Internal Revenue Service (IRS) announced on March 20, 2020.


This relief is provided under the Families First Coronavirus Response Act (the Act), which was enacted on March 18, 2020. The Act provides funds for employers with fewer than 500 employees to provide paid leave, either for their employees’ own health needs or to care for their family members. The Act aims to help employers keep workers on their payrolls while ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the coronavirus (COVID-19).

This Compliance Bulletin provides the DOL and IRS’ guidance


Paid Leave Requirements

The federal coronavirus relief law requires employers to provide paid sick and family leave for COVID-19-related reasons, including lack of child care.


Employer Tax Credits

Eligible employers may claim two tax credits based on the COVID-19-related paid leave that they provide between April 2 and Dec. 31, 2020.


Small Business Exemption

Employers with fewer than 50 employees may qualify for an exemption from paid child care leave requirements.


Employers should become familiar with their obligations to provide paid leave to employees under the Act and with the IRS’ guidance regarding tax credits for reimbursement. Employers should also monitor the IRS’ Coronavirus Tax Relief website for additional guidance, which is expected to be released in the near future, and:


  • Closely monitor the CDC, WHO and state and local public health department websites for information on the status of the coronavirus; and

  • Consider measures that can help prevent the spread of illness, such as allowing employees flexible work options like working from home. are enforced.

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 may receive 100% reimbursement for paid leave under the Act.

  • Health insurance costs are also included in the credit.

  • Employers face no payroll tax liability.

  • Self-employed individuals may receive an equivalent credit.

Fast Funds

  • Reimbursement is intended to 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 intends to send the refund as quickly as possible.

Small Business Protection

  • Employers with fewer than 50 employees may be eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or because child care is unavailable in cases, if viability of their business is threatened.

Easing Compliance

  • Requirements subject to 30-day non-enforcement period for good faith compliance efforts.

  • 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 sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form (which is expected to be released this week).

Background

The Act provides paid sick leave and expanded family and medical leave for COVID-19 related reasons and creates the refundable paid sick leave credit and the paid child care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.


Paid Leave

The Act provides that employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis. An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or 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 can receive two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s pay. An employee who is unable to work due to a need to care for a child whose school is closed, or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional 10 weeks of expanded paid family and medical leave at two-thirds of the employee’s pay.


Paid Sick Leave Credit

For an employee who is unable to work because of coronavirus quarantine or self-quarantine or has coronavirus symptoms and is seeking a medical diagnosis, eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.

For an employee who is caring for someone with coronavirus, or is caring for a child because the child’s school or child care facility is closed, or for whom the child care provider is unavailable due to the coronavirus, eligible employers may claim a credit for two-thirds of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit based on costs to maintain health insurance coverage for the eligible employee during the leave period.


Child Care Leave Credit

In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.


Prompt Payment for the Cost of Providing Leave

When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Under guidance expected to be released this week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit that amount with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers may file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure are expected to be announced this week.


Examples

If an eligible employer paid $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 paid $10,000 in sick leave and was 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 file a request for an accelerated credit for the remaining $2,000.

Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Small Business Exemption

Employers with fewer than 50 employees may be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where these requirements would jeopardize their businesses’ ability to continue. This exemption will be available in circumstances involving jeopardy to the viability of an employer’s business as a going concern. The DOL will provide emergency guidance and rulemaking to clearly articulate this standard.

Non-Enforcement Period

The DOL plans to issue a temporary non-enforcement policy that provides a time period for employers to come into compliance with the Act. Under this policy, the DOL will not bring an enforcement action against any employer for violations of the Act as long as the employer has acted reasonably and in good faith to comply with the Act. The DOL will instead focus on compliance assistance during the 30-day period.

More Information

For more information about these credits and other relief, visit Coronavirus Tax Relief on IRS.gov.

Source: Internal Revenue Service

Criminals prey on unfortunate circumstances, seeking to capitalize on victims during times of panic and hardship. Unfortunately, the coronavirus disease 2019 (COVID-19) pandemic is no exception.

The Cybersecurity and Infrastructure Security Agency (CISA), part of the U.S. Department of Homeland Security, told individuals to be vigilant about scams related to COVID-19.

Cyber criminals have been known to pose as charities or legitimate websites to lure victims into sending money or revealing personal information. Individuals should scrutinize any email, text or social media post related to COVID-19 and be cautious when clicking any links or attachments.


CISA offered specific guidelines for individuals to avoid being scammed online:

  • Avoid clicking links from unsolicited emails, and be wary of email attachments.

  • Use trusted sources when looking for factual information on COVID-19, such as CDC.gov.

  • Never give out personal or financial information via email, even if the sender seems legitimate.

  • Never respond to emails soliciting personal or financial information.

  • Verify a charity’s authenticity before making any donations.

It’s not always easy to disregard messages from senders that seem reputable, like banks. If individuals have any doubts about an email from a seemingly legitimate source, they should navigate to the organization’s website and use the contact information there to reach out. Individuals should never respond to the initial message.

If individuals have any doubts about a message’s sender, links or attachments, they shouldn’t click anything in the message.

What Can Employers Do?

Employers should consider notifying employees about the existence of these COVID-19 cyber scams. Especially during times of crisis, scammers will pose as reputable sources and use fear to solicit personal information. Employers should also communicate best practices so employees know how to respond to such solicitations.

It may also benefit employers to back up data and bolster network protections in case an employee clicks the wrong link and compromises the entire system.

Speak with ERM Insurance Brokers for more cyber security guidance.


During this time many employers are having their employees work from to help prevent the spread of Covid-19. In this age many businesses are using technology to have employees work from afar using telecommunications. Telecommuting allows employees to work from home or another alternate location and communicate with their employers electronically.

In addition to housing all of ’s policies and guidelines regarding telecommuting, this Work From Home Guide provides you with tips and self-evaluation methods to help you remain engaged and stay on track with your work.


For any questions regarding your company's telecommuting policy, please contact your HR.


1. SET A DESIGNATED WORK AREA.

Though this may seem trivial, choosing a spot in your home that is designated for working from home is an important step you can take to set yourself up for success. Choose a spot that you can work from every day that you are working from home. This could be spare bedroom that you’ve turned into a home office, a desk located in the corner of the living room or even the dining room table. However, you should try to stay away from working in your bed or on the couch, as these areas are associated with relaxation in your brain, which could negatively impact your productivity.

Make sure your workspace functions efficiently for you and your work style. Treat your home work area as you would an office cubicle. Make your workspace a place you enjoy going to each day, an area where you can focus and do your best work.


2. PLAN AND TEST COMMUNICATIONS.

To ensure that you aren’t left out of the loop, make sure to schedule regular meetings and communications with your team, supervisors and managers. It can be easy to feel disconnected with what’s going on in the office, so remaining engaged with your co-workers is key. Communications can include the following:

Of course, make sure that your communication method of choice functions properly before you consistently telecommute.


3. MAKE SURE YOUR NETWORK AND WORK PROGRAMS ARE PROTECTED.

Telecommuting introduces another set of potential cyber security risks. Make sure you speak with your manager about cyber security and strategies you can use for mitigating the risk of a cyber attack while you are working from your home.


4. DRESS LIKE YOU’RE GOING TO WORK IN THE OFFICE.

The way you dress has been proven to affect you psychologically. This means that although it may sound like a great idea to work from home in your pajamas, in reality, it isn’t. While you do not need to dress up in business formal attire if you are working from home, you should take the time to shower, brush your teeth and get ready for the day. Aim to dress in casual—not sloppy—attire.


5. AVOID DISTRACTIONS AND STAY ON TASK.

One big challenge of telecommuting is accountability. Without co-workers or managers nearby, it’s easy to become distracted and fall behind on work. Remember that working from home is a privilege, and that it will become apparent if you are not putting in the same effort into your work at home as you did in the office.

Stay focused on work throughout the day to maintain consistent productivity. Avoid online distractions as well. Limit the time spent on email, social media and websites unrelated to work. Set a timer on your phone or computer if necessary.


6. EVALUATE YOURSELF PERIODICALLY.

To ensure that telecommuting is working for you, be sure to conduct self-assessments periodically. Things to include in your assessment could include the following:

What is working as far as your hours? What are you accomplishing in the office versus out of the office? Are you meeting all of your deadlines? Are you feeling connected with your co-workers?


7. REMEMBER TO TAKE BREAKS WHEN YOU NEED TO.

Just like you are encouraged to take breaks while you’re in the office, remember to allow yourself time throughout the day for quick breaks. If you need a short break to gather your thoughts, try walking around the house or down the street, stretching, or making a snack or meal.

If you need to take a longer break or socialize, plan time in your schedule for this. A major advantage of working from home is having flexibility. Before you take an hour or two out of your day, though, make sure to communicate and check with your manager so that you remain compliant with ’s policies.


8. BE HONEST WITH YOURSELF.

Telecommuting is not a viable option for every employee. If you find that working from home is negatively impacting your productivity or making you feel disconnected from your team and your work, speak to your manager.

CALL US

Tel: 949-222-0444| Fax: 929-222-0445

EMAIL US
OPENING HOURS

Mon - Fri: 9am-5pm

OVER 35 YEARS EXPERIENCE

We are the premier brokerage, consulting, risk management and financial services provider. Through client-partnerships we develop individualized solutions, characterized by industry and service type. 

  • Yelp Social Icon
  • LinkedIn Social Icon
  • Facebook Social Icon
  • YouTube Social  Icon
  • Instagram Social Icon
VISIT US
OUR SERVICES

- Insurance Review

- Claims Management

- Safety

- Human Resources

- Compliance

- Fee Based Insurance

A+ better business bureau insurance

3000 W. MacArthur Blvd  Suite 120

Santa Ana, CA 92704