FFCRA Payroll Tax Credit score Prolonged Till September

By Last updated Mar 18, 2021

The most recent COVID-19 law, the American Rescue Plan Act of 2021 (ARPA), expands payroll tax credits for emergency paid leave and the expanded Family Medical Leave Act (FMLA), first enacted by the Families First Coronavirus Relief Act (FFCRA) ).

The FFCRA urged many employers to offer these COVID-19 related vacations between April 1 and December 31, 2020. As of January 2021, FFCRA vacation is optional, but employers who choose FFCRA-based vacation can receive a tax credit to cover wages paid. With the December stimulus program, these tax credits were extended to March 31, 2021. Now the ARPA is extending the loans until September 30, 2021.

In addition, the ARPA extends and limits employers’ eligibility for tax credits in the following essential ways:

Additional reasons for supporting the sickness emergency. ARPA expands the reasons an employer can offer and receive an emergency sick leave tax credit to include missed time because the worker is either receiving or recovering from adverse effects from a COVID-19 vaccine, or (b) seeking or waiting for the results of a COVID-19 test if the employee has been exposed to COVID-19 or if the employer has requested the test. The tax credit employers can receive for these new reasons is based on the employee’s regular wage, up to a limit of $ 511 per day.
“Reset” paid sick leave. ARPA provides that between April 1 and September 30, 2021, employers can receive a tax credit for an additional 10 days of paid sick leave. While the December bill only allowed employers to apply for paid vacation credit, unless the employee had done so, ARPA previously used the original 10-day allotment, allowing employers to apply between April 1 and April 30. Apply for a tax credit for an additional 10 days on September 1st, 2021.
Non-discrimination. ARPA expressly provides that an employer who has some employees – e. B. Highly paid employees, full-time employees, or salaried employees – and not others, to emergency and / or extended FMLA expansions, may not apply for a tax credit for vacation wages paid.
Additional reasons to support extended family vacation. Previously, employers were only allowed to apply for extended FMLA tax credits if the employee needed vacation in connection with the school or child care facility being closed or unavailable. ARPA extends the basis for an extended FMLA to include all reasons that would support an emergency sick leave. To the extent that an employee did not exhaust their FMLA entitlement during the vacation year – in whatever way the employer determined the vacation year (e.g. calendar, ongoing) – the employer can now receive a tax credit for up to 12 weeks request to leave for any or all of the following reasons:
- The employee is subject to or caring for an individual who is subject to a federal, state, or local quarantine or isolation order.
- The employee has been advised to self-quarantine by a healthcare provider because of concerns about COVID-19 or is caring for someone who has been advised.
- The employee is looking after a son or daughter because the school or child care facility is closed or not available due to COVID-19.
- The employee is receiving or experiencing negative effects of the COVID-19 vaccine, or is waiting for the results of a COVID-19 test requested by the employer or required due to close contact.
Increased cap on expanded FMLA dollars. The FFCRA, as passed, has limited the amount of vacation wages that employers can apply for credit to $ 10,000 per employee. The ARPA increases this limit to $ 12,000.

While these tax credits make the decision to extend the FFCRA more attractive, there are other considerations that may speak for or against extending the vacation. These considerations are likely to be employer specific, given the type of work and workforce, the number of employees expected to have skilled needs, and the risk that an employee will work if they expose others to financial problems avoid hardship.