Families First Coronavirus Response Act (FFCRA); The Treasury Department, Internal Revenue Service (IRS) and the U.S. Department of Labor (Labor) announced plan for the implementation of paid-leaves for employees & tax credits for small and mid-sized businesses in the United States. Coronavirus tax relief program for workers as well as  small and midsize employers is designed under the Families First Coronavirus Response Act (Act), signed by U.S. President Donald Trump on March 18, 2020. According to the announcement, all small and midsize employers can start taking advantage of two new refundable payroll tax credits related to coronavirus. The payroll tax credits are designed to immediately and fully reimburse employers, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.

Families First Coronavirus Response Act will facilitate the United States to fight and defeat coronavirus (COVID-19) by providing all American businesses (with less than 500 employees) funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. This legislation will further help the employers to keep their employees on their payrolls. Not only this, employees will not be urged to select between their paychecks and the public health measures required to fight the coronavirus. Coronavirus paid leaves for employees as well as Coronavirus tax credits for employers are really a good initiative by the U.S. government to combat coronavirus. The tax deadline has already been extended for filing returns and other federal tax payments to the IRS and the new tax deadline is July 15, 2020.

Coronavirus Tax Relief- Basic Benefits:

1.      Paid Sick Leaves For Employees:

  • For coronavirus related medical reasons, employees receive up to 80 hours of paid sick leave
  • For COVID-19 related reasons, expanded paid child care leave are granted when employees’ children’s schools are closed or child care providers are not available.

2.      Complete Coverage:

  • Employers receive 100% reimbursement for the paid leaves pursuant to the Act.
  • In this credits, health insurance costs are also included.
  • Payroll tax liability is not applied to the employers.
  • An equivalent credit is given to the self-employed individuals.

3.      Fast Funds:

  • Reimbursement will be quickest and easily obtainable.
  • An immediate dollar-for-dollar tax offset will be provided against payroll taxes.
  • The IRS will send the refund as quickly as possible, in cases where the refund in owed.

4.      Small Business Protection:

  • Employers with less than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the business viability is vulnerable.

5.      Easing Compliance:

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

Businesses can retain and access funds to get the immediate advantage of the paid leave credits that they would otherwise pay to the IRS in payroll taxes. Employers can also request an expedited advance from the IRS if those amounts are not sufficient to cover the cost of paid leave. For this purpose, a streamlined claim form will be released by the IRS hopefully in the coming week. Not only this, the IRS also announced Waivers for Offer-In-Compromise (OIC) Applications as well as High-Deductible Health Plans (HDHPs) To Cover Coronavirus Costs to help taxpayers in the country.

Coronavirus Paid-Leaves & Coronavirus Tax Credits:

U.S. Families First Coronavirus Response Act provided paid sick leave and expanded family and medical leave for COVID-19 related reasons to the workers. Not only this, the Act also created the refundable paid sick leave credit and the paid child care leave credit for eligible employers in the United States. All businesses and tax-exempt organizations with fewer than 500 employees are considered as eligible employers to get this relief. Eligible employers are required to provide coronavirus emergency paid sick leave and emergency paid family and medical leave under the Act to their employees. In this way, those eligible employers will be able to claim coronavirus credits based on qualifying leave they provide between the effective date and December 31, 2020. Self-employed individuals will also get equivalent coronavirus credits on the basis of similar circumstances. If you need any further assistance regarding IRS paid-leaves for workers & tax credits for employers due to coronavirus, contact Black Ink representative.

Employees Paid Leave during Coronavirus:

  • According to Families First Coronavirus Response Act, the employees of the 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. The conditions for employees for not being able to work include the employee are quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis for coronavirus.
  • According to Families First Coronavirus Response Act, the employees of the eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 2/3rd of the employee’s pay where the employee is unable to work. The conditions for employees for not being able to work include the 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, and/or the employee is experiencing significantly same symptoms as mentioned by the U.S. Department of Health and Human Services.
  • According to Families First Coronavirus Response Act, the employees of the eligible employers can up to an additional ten weeks of expanded paid family and medical leave at 2/3rd of the employee’s pay where the employee is unable to work. The conditions for employees for not being able to work include the need to care for a child whose school is closed, or child care provider is not available for reasons associated to coronavirus COVID-19.

Employers Paid Sick Leave Credit during Coronavirus:

  • For an employee who is not able to work as a result of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis, his/her employers can get paid sick leave credit from the IRS. Coronavirus paid sick-leave credit is provided for the eligible employers, who may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay. Paid sick leave credit for employers can be up to $511 per day and $5,110 in the aggregate, for a total of 10 days period.
  • For an employee who is not able to work as he/she is caring for someone with Coronavirus, or is caring for a child because the child’s school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, his/her employers can get paid sick leave credit from the IRS. Coronavirus paid sick-leave credit is provided for the eligible employers, who may receive a refundable sick leave credit for sick leave at two-thirds of the employee’s regular rate of pay. Paid sick leave credit for employers can be up to $200 per day and $2,000 in the aggregate, for a total of 10 days period.
  • An additional tax credit is provided to the eligible employers which is determined on the basis of the costs to maintain health insurance coverage for the eligible employee during the leave period.

Child Care Leave Credit for Employers during Coronavirus:

  • Child Care Leave Credit is provided in addition to the sick leave credit to the employers as per the Families First Coronavirus Response Act, USA.
  • Those employees who are not able to work as 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, their eligible employers may receive a refundable child care leave credit.
  • Child Care Leave Credit is equivalent to two-thirds of the employee’s regular pay that can be up to $200 per day or $10,000 in the aggregate.
  • Up to 10 weeks of qualifying leave can be calculated for the child care leave credit.
  • An additional tax credit is provided to the eligible employers which is determined on the basis of the costs to maintain health insurance coverage for the eligible employee during the leave period.

Prompt Payment For The Cost Of Providing Leave:

  • Employers are required to withhold from the federal income taxes paychecks and the Social Security and Medicare taxes share of their employees. This is done when the employers make payments to their employees. After then, the employers 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.
  • As per the guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be eligible to retain an amount of the payroll taxes equivalent to the amount of qualifying sick and child care leave that they paid, instead of depositing them with the IRS.
  • The payroll taxes that are available for withholding include withheld federal income taxes, the employee share of Social Security and Medicare taxes, as well as the employer share of Social Security and Medicare taxes with regard to all employees.
  • If the cost of qualified sick and child care leave paid is not covered by the available payroll taxes, employers will be eligible to file a request for an accelerated payment from the IRS. For this purpose, the agency is expecting to process these requests within two weeks or less. All the details of expiated, new procedure regarding this matter will be announced by the IRS next week.

Examples For Paid Leaves & Tax Credits Related To Coronavirus:

We are presenting a few examples to understand the employers about the payments of their quarterly returns and child care leave & sick leave credit amounts, after the application of coronavirus paid leaves as well as coronavirus tax credits:

  • If an eligible employer is required to deposit $9,000 in payroll taxes (including taxes withheld from all its employees) and he has paid $6,000 in sick leave, the employer could use up to $6,000 of the $9,000 of taxes it was going to deposit for making qualified leave payments. Under the law, the employer would only be required to pay and deposit the remaining $3,000 on its next regular deposit date.
  • If an eligible employer is required to deposit $7,000 in payroll taxes (including taxes withheld from all its employees) and he has paid $9,000 in sick leave, the employer could use the entire $7,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000 with the IRS.
  • Self-employed individuals can also receive equal child care leave and sick leave credit amounts under the same circumstances. Self-employed individuals can claim these credits on their income tax return that will help them to reduce estimated tax payments.

Small Business Exemption:

  • All small businesses in USA with less than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would put the business ability at risk to continue.
  • On the basis of clear and simple criteria, this exemption will be available in those circumstances where the viability of an employer’s business is jeopardized as a going concern.
  • To noticeably articulate this standard, labor will provide emergency guidance as well as rulemaking.

Non-Enforcement Period:

  • A temporary non-enforcement policy will be issued by the labor that provides a period of time for employers to come into compliance with the Families First Coronavirus Response Act.
  • Under the temporary non-enforcement policy, an enforcement action cannot be made by the labor against any employer for violations of the Act so long as the employer has acted rationally and in good faith to act in accordance with the Act.
  • Instead of it, labor will focus on compliance assistance during the 30-days period.

The IRS further notified that complete information about the procedure to receive an advance payment of the credit will be issued next week. Stay connected with Black Ink to see all the latest happenings in the IRS department related to coronavirus. So that was almost everything about Families First Coronavirus Response Act (FFCRA).

 

 

 

 


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