On January 28, 2021, the IRS published updated FAQs to address the availability of federal tax credits as reimbursement for emergency paid sick leave and emergency family and medical leave provided to eligible employees between January 1 and March 31, 2021.
The revisions brought the IRS guidance into alignment with legislation that extended into 2021 tax relief for employers covered by the recently expired Families First Coronavirus Response Act (FFCRA). The tax credits are available only if:
- The employer previously fell under the umbrella of FFCRA;
- The employer voluntarily chooses to provide FFCRA-compliant paid leave between January 1 and March 31, 2021; and
- The employee taking paid leave had not already exhausted their FFCRA entitlement in 2020.
In addition to addressing employer eligibility criteria and defining the periods of time for which the tax credits are available, the FAQs answer important questions for those interested in pursuing the tax credits, including:
- How employers should substantiate eligibility for the tax credits;
- How to determine the proper amount of credit for qualified sick and family leave wages;
- How the tax credits interact with other tax credits and Paycheck Protection Program (“PPP”) loans; and
- How to claim the credits.
If you have questions about the expiration of the FFCRA paid leave mandate and bifurcation and extension of its associated tax provisions, check out our previous blog on that topic.
If you’re looking for assistance managing claims or to ensure compliance across your organization, ReedGroup has solutions for you. Check out our offerings here.
Information provided on this blog is intended for general educational use. It is not intended to provide legal advice. ReedGroup does not provide legal services. Consult an attorney for legal advice on this or any other topic.