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March 25, 2020
The Department of Labor (DOL) and Internal Revenue Service (IRS) have released initial guidance clarifying several provisions set forth in the Families First Coronavirus Response Act (FFCRA). A high-level summary of these items, as well as links to the guidance, are provided below.
The DOL guidance indicates the new paid leave requirements go into effect April 1, 2020 (without a retroactive effect) and continue through the end of 2020. Among other the things, the guidance clarifies the following items:
The DOL has promised additional details and guidance will be available in early April.
DOL Guidance on COVID-19 and the Workplace can be found at
opens in a new windowhttps://www.dol.gov/agencies/whd/pandemic.
Employers required to provide Paid Sick Leave and Expanded FMLA under the FFCRA are eligible for refundable tax credits applied against the employer’s quarterly payroll tax return (i.e. Form 941) to offset such costs. The IRS indicates employers will be able to retain an amount of the payroll taxes equal to the amount of paid leave, plus related group health plans costs (rather than depositing them with the IRS). Payroll taxes available for retention include withheld federal income taxes, as well as employee and employer share of Social Security and Medicare taxes. If there are insufficient amounts available via payroll taxes to cover the employer’s expenses related to the paid leave requirements, employers may file a request for an accelerated payment from the IRS and IRS expects to process such requests in 2 weeks or less. The guidance provided to date is high level. The IRS has promised additional details in the next week.
IRS Guidance on Refundable Tax Credits can be found at
opens in a new windowhttps://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.
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