FFCRA TAX CREDITS FOR EMPLOYERS, ROUND THREE!
Many individuals will start seeing a third round of stimulus checks after Congress’ passage of the $1.9 trillion American Rescue Plan Act of 2021 (ARPA), signed into law by President Biden on March 11, 2021. Less reported, but potentially equally important, is the tax credit assistance for qualifying private employers with less than 500 employees.
Let’s refresh ourselves a little on the legislative history of the past year. Among the first pieces of legislation passed at the start of the COVID-19 pandemic was the Families First Coronavirus Response Act (“FFCRA”), which created a new emergency paid sick leave and expanded the Family and Medical Leave Act. These mandatory benefits provided leave for employees for certain COVID-19 related reasons. Employers in turn received tax credits for these leave payments. The FFCRA leave entitlements expired at the end of 2020.
Next came the Consolidated Appropriations Act of 2021, more familiarly, the Heroes Act or second stimulus bill, which was enacted in December of 2020. Under this law the employers, who were bound by the 2020 FFCRA mandates and chose to voluntarily extend paid leave into the new year, qualified for corresponding tax credits through March 31, 2021.
And now comes round three. The ARPA, starting April 1, 2021, includes the following heightened benefits:
- Extension of leave. Employers may voluntarily provide emergency paid sick leave and paid family and medical leave through September 30, 2021, for which they can receive the corresponding tax credits;
- Expansion of the covered reasons for sick leave. If the employer wishes to benefit from the available tax credits, the employer may provide sick leave for any of the initial six reasons set forth in the FFCRA, plus for employees who are: (1) obtaining immunization related to COVID–19 or is recovering from any injury, disability, illness, or condition related to such immunization or (2) seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19, when such employee has been exposed to COVID-19 or the employer has requested such test or diagnosis;
- Expansion of Emergency Family and Medical Leave Tax Credits. Up until now, emergency family and medical leave tax credits could only be taken by employers if the employee could not work due to having to care for a child whose school or childcare facility had been closed because of the pandemic. Under the new law, employers may claim tax credits for emergency family and medical leave for any of the reasons originally set forth in the FFCRA along with the two expanded reasons listed directly above. Also, the two-week waiting period on emergency family and medical leave has been removed and the aggregate cap raised from $10,000 to $12,000;
- Reset of the 10-day limit for paid sick leave. If the employer chooses to extend the leave benefits and the employee had previously used up the emergency paid sick leave, the employer must provide an additional 10 days or 80 hours;
- Leave for all employees. Emergency paid sick leave and paid family and medical leave must be provided to all classes of employees.
Notably, FFCRA leave has been voluntary since January 1, 2021, including this latest extension. However, employers may want to pay heed to some of the enhanced benefits provided by the ARPA as COVID-19 continues its presence in our everyday lives. The new tax credits are a great way to offer time off to employees who want to get vaccinated, but are afraid of missing work from common vaccine reactions. If you have questions about the new voluntary ARPA leave, call the experts at McKague Rosasco LLP.
