On March 20, 2020, the IRS announced that small and midsize employers will be able to take advantage of two new refundable payroll tax credits, designed to fully reimburse them, dollar-for-dollar, for the cost of providing coronavirus-related leave to their employees provided under the Families First Coronavirus Response Act (FFCRA), signed by President Trump on March 18, 2020 and which goes into effect April 2, 2020.
According to the IRS, to take advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released this week.
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able to file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced this week.
For more information, go to the IRS Coronavirus Tax Relief page.