New Federal Stimulus Legislation Extends FFCRA Tax Credits Until September 30, 2021 | Laner Muchin, Ltd.


The American Rescue Plan Act of 2021 (ARPA), which was enacted on March 11, 2021, does not require employers to offer sick leave and paid family leave related to COVID-19. But the ARPA continues to allow certain private sector employees to benefit from refundable tax credits for voluntarily offering paid sick leave and family leave related to COVID-19. In summary:

  • No mandate: Private and public employers are not required to offer emergency paid sick leave (EPSL) or paid leave under the Family and Medical Leave Extension Act (EFML) related to COVID-19.
  • Private employers covered: Only private employers with fewer than 500 employees can claim refundable tax credits. Public employers cannot claim the tax credit.
  • Period of time: ARPA tax credits can be claimed for eligible EPSLs and EFMLs paid between April 1, 2021 and September 30, 2021.
  • Resetting the bank of tax creditable days to zero: Employers can claim the tax credit for up to 10 new days of EPSL and / or 12 weeks of EFMLA taken after April 1, 2021 per employee, even if the employee has used and exhausted previously available EPSL and EFMLA .
  • EPSL & EFML qualifier: ARPA expands previously eligible absences to include time off because (a) the employee is vaccinated and / or is recovering from side effects of the vaccine, or (b) the employee is waiting for the results of a test or a COVID-19 diagnosis after being in close contact with someone with COVID-19 or at the request of the employer. This means that paid leave for the following reasons is eligible for tax credits:
  1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. Employee advised by health care provider to self-quarantine due to COVID-19 concerns;
  3. The employee has symptoms of COVID-19 and is seeking a medical diagnosis, the employee is seeking or awaiting the results of a diagnostic test or a medical diagnosis of COVID-19, and this employee has been exposed to COVID-19 or the the employee’s employer has requested such a test or diagnosis, or the employee is obtaining a COVID-19-related vaccination or is recovering from an injury, disability, illness or related condition to such vaccination;
  4. The employee is dealing with someone on a government quarantine or isolation order or who has been advised by a health care provider to self-quarantine as described above; and
  5. Employee is looking after a child because the child’s school or place of care has been closed, or the child care provider for that child is not available, due to COVID precautions 19.
  • Non-discrimination requirement: Employers cannot receive tax credits if paid time off is offered in a way that favors highly paid employees, full-time employees, or employees based on seniority. In other words, to benefit from the tax credit, paid leave must be offered to all employees, whether they are full-time or part-time, hourly or salaried, newly hired or older, or highly paid or receiving the Minimum wage.
  • Salaries taken into account for tax credits: Tax credits can be claimed up to $ 511 per day for reasons (1), (2) and (3) above and up to $ 200 per day for paid leave for reasons (4) and (5) above. Tax credits are limited to a total of $ 12,000 for paid leave for reasons (5) (EFML) (increased from the previous cap of $ 10,000), and the two-week waiting period to receive l ‘Paid EFML no longer applies. The authorized credit amount increases by the portion of the employer’s eligible health plan expenses that are properly attributable to eligible salaries paid, as well as amounts paid for contributions to defined benefit pension plans and apprenticeship programs. required under collective agreements.
  • Coordination with other programs: Tax credits cannot be claims for labor costs covered by loans or grants under certain provisions of the Small Business Act, Small Business Economic Assistance Act, Non-Profit profit and hard-hit venues, or the Restaurant Revitalization Grant under ARPA. However, tax credits may be claimed for salary costs for qualifying paid holidays where PPP loans have not been canceled (subject to guidance and regulations to be published later).

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