From full cities to businesses shutting down, the coronavirus has turned the world upside down. Whether you have been infected or not, in some way almost everyone has been feeling the effects of the coronavirus. As of March 20, 2020, the Internal Revenue Service has a new plan regarding paid leave for workers and tax credits for small and midsize businesses.
IRS Implementing Tax Credits
In an effort to combat and beat the coronavirus, President Trump signed the Families First Coronavirus Response Act (Act) on March 18, 2020. On March 20, 2020, the U.S. Treasury Department, the IRS and the U.S. Department of Labor have announced that under this Act, all employers with fewer than 500 employees can take advantage of two new refundable payroll tax credits.
These tax credits are designed to completely reimburse the cost of allowing coronavirus-related leave to all employees. This is in an effort to put a halt to the spread of the coronavirus and allow employees the relief of not having to choose between their paycheck or their health and safety.
Under this act, employees can receive up to 80 hours of paid sick leave and expanded paid childcare leave for those with children whose schools are closed or childcare providers are unavailable. Your company can receive complete coverage, a quick reimbursement, easy compliance and small business protection.
Those eligible for these tax credits must be employers or tax-exempt organizations with fewer than 500 employees. These employees must be required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. Those who can prove that they provided qualifying leave between the effective date and December 31, 2020, will be able to claim these credits. Those who are self-employed and fall under the same criteria can receive equivalent credits.
For those who may need to take immediate advantage of this plan, you can access and retain funds that you would otherwise pay to the IRS in payroll taxes. Should those amounts not be enough to cover all paid leave, employers have the option of seeking additional support from the IRS in the form of expedited advancements.