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:
- Comply with a federal, state, or local quarantine or isolation order;
- Self-quarantine per a healthcare provider’s advice;
- Obtain a medical diagnosis if experiencing symptoms of COVID-19; or
- 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
Notice 2021-31- On February 8th, 2021, the IRS announced that a new form is now available for eligible self-employed individuals to claim sick and family leave tax credits under the Families First Coronavirus Response Act. The new form, Form 7202, can now be completed and filed with your 2020 Form 1040.
Notice 2020-54 - On July 8, 2020, the Treasury Department and the IRS issued guidance to employers requiring them to report the amount of qualified sick and family leave wages paid to employees under the Families First Coronavirus Response Act on Form W-2.
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 Form 7202, and Instructions - Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals
TAX WARRIOR BLOGS & ALERTS
February 23, 2021 - Self-employed Individuals Can Claim COVID-19 Sick and Family Leave Tax Credits
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.