On April 17, 2020, the IRS updated tax credit questions and answers regarding coronavirus (COVID-19) paid leave. Specifically, the agency added a question to address certain leave provided by employers of health care providers or emergency responders.

The Families First Coronavirus Response Act (FFCRA) included provisions mandating employers with less than 500 employees to provide paid leave to employees who are unable to work or telework due to certain COVID-19-related reasons. Federal tax credits are available to fund the leave payments.

Employers of health care providers or emergency responders are permitted to exclude these employees from the paid sick leave and expanded family and medical leave requirements. The exclusions could be applied as to leave taken for certain qualifying reasons (e.g., to care for a family member under a quarantine or isolation order), but not other reasons (e.g., to care for employee’s own health upon experiencing symptoms of COVID-19 and seeking a medical diagnosis).

However, if an employer elects to allow a health care provider or emergency responder to take FFCRA paid leave for a specific COVID-19-related reason, it is subject to all other FFCRA requirements with respect to such leave. Accordingly, the new Question #67 clarifies that for a non-excluded employee and reason, the employer providing the paid leave for the health care provider or emergency responder is also entitled to the corresponding tax credit. The employer can claim the credit for the employee’s qualified sick leave wages, the employer’s share of Medicare tax on those wages, and any allocable qualified health plan expenses.

Employers of health care providers and/or emergency responders may find this additional guidance to be helpful.

COVID-19-related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs »

Source: NFP BenefitsPartners