Paid Leave for Workers and Tax Credits for Small and Medium Size Businesses

On March 18th, President Trump signed the Families First Coronavirus Response Act (the Act). On March 20th, 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.

Key Takeaways:

  • Paid Sick Leave for Workers
    • For COVID-19 related reasons, employees receive up to 80 hours of paid 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.
  • Paid Child Care Leave
    • For COVID-19 related reasons, when employees’ children’s schools are closed or child care providers are unavailable, employees receive up to 80 hours of paid leave at 2/3 of the employee’s regular rate of pay, up to $200 per day and $2,000 in the aggregate, for a total of 10 days.
  • Complete Coverage
    • Employers receive full reimbursement for paid leave pursuant to the Act, as outlined above.
      • Health insurance costs are also included in the credit.
      • Employers face no payroll tax liability.
      • Self-employed individuals receive an equivalent credit.
  • Fast Funds
    • Reimbursement will 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 will send the refund as quickly as possible.
  • Small Business Protection
    • 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.

For more details about the Act, please contact us. We’re ready to assist you in taking full advantage of the COVID-19 relief it provides.

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