Treasury, IRS and Labor announce plan to implement Coronavirus-related paid leave

On Friday (March 20), the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.
The Act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
KEY TAKEAWAYS
  • Employers receive 100% reimbursement for paid leave pursuant to the Act.
  • Self-employed individuals receive an equivalent credit.
  • Reimbursement will be quick and easy to obtain.
  • Immediate dollar for dollar offset against payroll taxes will be provided. If those amounts are not sufficient to cover the cost of paid leave, employers can seek expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
  • Employers with fewer 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 viability of the business is threatened. The exemption will have simple and clear criteria that make it available in circumstances involving jeopardy to the viability of the employer’s business as a going concern.  Emergency guidance and rule-making by the Labor Department will clearly articulate the standard.
  • Please read more about the Treasury, IRS and Labor Departments plan to allow businesses to swiftly recover the cost of providing Coronavirus-related leave, click here for more information about Coronavirus Tax Relief, and visit the website next week for information about the advance payment of the credits.
  • There will be a 30-day non-enforcement period for businesses making a reasonable effort.
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