COVID-19: FAMILIES FIRST ACT

FAMILIES FIRST CORONAVIRUS RESPONSE ACT

The Families First Coronavirus Response Act (FFA) was approved by the Senate on March 18, 2020, and swiftly signed by the President into law.

While the FFA contains tax provisions, the primary goal was to ensure affected individuals receive paid leave, food assistance and unemployment insurance during this unprecedented time.  


SUMMARY OF FFA

Emergency Family Leave and Medical Leave Expansion

The FFA expands the existing Family and Medical Leave Act (FMLA) to specifically address COVID-19 by creating an emergency paid leave program available through 12/31/2020.

Emergency Paid Sick Leave

Private sector employers with fewer than 500 employees, and all government entities, must provide employees unable to work with immediate paid sick time to:

  1. Comply with a federal, state, or local quarantine or isolation order;
  2. Self-quarantine per a healthcare provider’s advice;
  3. Obtain a medical diagnosis if experiencing symptoms of COVID-19; or
  4. Care for an individual in mandatory isolation/self-quarantine and/or to care for a child whose school or day care has closed due to COVID-19.

Full-time employees receive 80 hours (8 hours/day for 10 days) while part-time employees receive time off equivalent to their normal two-week schedule.  This paid sick time is a ‘use it’ or ‘lose it’ and is not eligible for carryover from year-to-year.

Employer Payroll Tax Credits

To offset the cost associated with the emergency family & sick leave programs, new refundable tax credits were created. The refundable credits under the FFA  offset the employers’ portion of Social Security taxes.  The credits generally equal the required payments for each program including the applicable payment caps per employee.

Self-Employed Tax Credit

If you are self-employed, the FFA provides similar family leave and paid sick leave tax credits.


IRS GUIDANCE AND RESOURCES

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

IRS COVID-19-Related Tax Credits for Paid Sick and Paid Family Leave: Overview

IR-2020-89- on May 7, 2020, the IRS provided information about three new credits available to many businesses hit by COVID-19.

Notice 2020-22 - On March 31, 2020 the IRS issued a notice providing guidance on penalty relief related to employer’s deposits of federal employment taxes and income taxes that are expected to be reduced by the amount of refundable tax credits granted in the Families First Coronavirus Response Act and the CARES Act.

Notice 2020-21 - On March 27, 2020 the IRS issued a notice provide guidance on the effective date for employment tax credits under the Families First Coronavirus Response Act.
 
IR-2020-57 -  On March 20, 2020 Treasury, IRS and Labor announced their plan to implement the Coronavirus related paid leave for workers and tax credits for small and midsize businesses to recover the cost of providing Coronavirus related leave.
 

IRS FORMS

IRS Form 7200 - Advance Payment of Employer Credits Due to COVID-19 and related instructions.

DRAFT IRS Form 941 for 2020: Employer’s QUARTERLY Federal Tax Return (Rev. April 2020)

 


TAX WARRIOR BLOGS & ALERTS

March 19, 2020 - Families First Coronavirus Response Act Enacted


THIRD PARTY RESOURCES

Department of Labor's Families First Coronavirus Response Act: Questions and Answers

Department of Labor required poster for FFCRA

Department of Labor FAQ re: FFCRA poster requirement

House Committee on Ways & Means - FAQ: Coronavirus Legislation provides additional insight into the intent of coronavirus legislation, including the Families First Act, and how it may affect your business.

Overview Employer Paid Leave Requirements and Tax Credit Provisions.