The American Rescue Plan Extends FFCRA Tax Credit score, However Not the Mandate

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (the “Plan”). The plan is the latest act to fight the COVID-19 pandemic and comes nearly a year ahead of the date that the first COVID Relief Act, which includes the Families First Coronavirus Response Act (FFCRA), was passed.

The employer vacation obligations contained in the FFCRA ended on December 31, 2020. The Consolidated Funds Act of 2021, passed on December 27, 2020, did not expand the FFCRA obligations. Rather, it gave employers under the FFCRA the option to voluntarily choose to give their workers “qualified” paid sick leave or paid family leave wages and continue to receive a tax credit on that wage through March 31, 2021.

Although it has been discussed to expand the FFCRA mandate to employers of all sizes, the plan does not require employers to grant COVID-19 related vacation and continues to limit the tax credit to employers covered by the FFCRA (which means for private employers) Employers with fewer than 500 employees).

For those insured employers who voluntarily choose to take vacation leave, the plan extends the date that employers can receive tax credits for qualified wages paid to employees from March 31, 2021 through September 30, 2021. In contrast to the Consolidated Funds Act, which did not expand legitimate grounds, including vacation and limited qualified wages for unused entitlements under the FFCRA, the plan expands qualified vacation grounds and provides new allotments of paid time that are eligible for tax credits come.

Here are some common questions about the changes the plan made:

Do employers have to take paid emergency leave or family emergency leave?

No. The mandate ended on December 31, 2020.

Can insured employers receive the tax credit if they opt for paid sick leave or family medical leave?

Yes. The Consolidated Appropriations Act of 2021 allowed insured employers who had voluntarily granted sick leave or paid family leave on the same terms as in the FFCRA to continue to receive a tax credit through March 31, 2021, which continued from April 1, 2021 through September 30 Qualified wages paid in 2021.

For what purposes can paid vacation be granted so that an insured employer receives a tax credit?

In order to receive the tax credit, vacation must be granted for either the Emergency Paid Sick Leave or the Emergency Family and Sick Leave for a Qualifying Reason under the FFCRA. The American rescue plan expanded the grounds for both Paid Sick Leave (“PSL”) and Paid Family Leave (“PFL”) to include leave for an employee who:

• Receiving a COVID-19 immunization,
• Recovering from an injury, disability, illness, or condition related to COVID-19 immunization, or
• Finding or waiting for the results of a COVID-19 test or diagnosis because either the employee has been exposed to COVID or the employer requested the test or diagnosis

Additionally, the plan expanded the reasons vacation can be reported as a PFL (which is a longer period of time than the PSL) and still receives the credit to include all reasons PSL could be used, including when a Employee is subject to a quarantine or isolation order in which an employee has been asked to self-quarantine by a healthcare provider due to COVID-19, an employee experiences symptoms of COVID-19, and a medical diagnosis is requested with an employee to attend to him takes care of a person who is subject to a quarantine or isolation order or who has been advised to self-quarantine and whose school or childcare facility for an employee’s son or daughter is closed due to COVID-19.

How much vacation can an insured employer grant and still receive the tax credit?

The plan provides that from April 1, 2021, insured employers will receive a tax credit for up to ten days of PSL for employees, even if an employer has previously received a tax credit for the PSL vacation granted to these employees before April 1, 2021 The tax credit an employer can receive for PSL is based on a worker’s regular wage if the leave is due to any of the new reasons related to vaccinations or tests (see above) or the worker’s own symptoms, quarantine or isolation up to is required an upper limit of $ 511 per day. For other PSL reasons, the tax credit an employer can receive is capped at 2/3 of the employee’s regular wage and capped at $ 200 per day.

Employers can also receive a tax credit for up to 12 weeks of PFL. The overall PFL cap has been increased from $ 10,000 to $ 12,000. An employer can now receive a total of up to $ 12,000 in tax credit per employee. Available credit per employee is still limited to 2/3 of the employee’s regular pay up to a maximum of $ 200 per day for all PFL vacation reasons, including the new vacation reasons related to vaccinations or tests (described above) and the reasons for which you receive a cap of $ 511 per day when wages are paid under PSL regulations. The first two weeks of the PFL no longer have to be unpaid.

Is an insured employer eligible for the tax credits if he only provides PSL and / or PFL to certain employees?

The plan includes a non-discrimination obligation. Employers cannot claim a tax credit for PSL or PFL wages paid in a calendar quarter if the employer is a highly paid employee (as defined in Section 414 (q) of the Internal Revenue Code), full-time employee, or discriminates against employees based on length of service the provision of the PSL or PFL, if applicable. However, this non-discrimination provision applies separately to PSL wages and PFL wages. Therefore, employers should be able to choose only PSL or PFL and still receive the tax credit for paying the PSL or PFL wages.

Applicability of tax credits under the plan is subject to IRS guidelines. As in response to the Consolidated Appropriations Act of 2021, we expect the IRS to issue additional FAQs in the near future.

Jackson Lewis attorneys are closely monitoring updates and guidance in this area and are available to employers in developing policies and procedures related to COVID-19 paid time off.