Planning to Claim Tax Credits Under the FFCRA? Here's What You Need To Know

Apr 2, 2020

By Sarah L. Wixson | Related Practice: Employment

The federal Families First Coronavirus Relief Act (FFCRA) took effect on April 1st. The Act requires small and mid-sized employers (any employee with fewer than 500 employees) to provide paid sick leave and paid family leave for workers for a variety of COVID-19 scenarios. The Act gives these employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing the paid sick and family leave wages to their employees for leave related to COVID-19. If an employer pays sick leave or EFMLA in excess of their quarterly payroll tax bill, the employer can file for reimbursement in the form of an advance payment of future credits.

stethoscope

The IRS has issued guidelines specifying the information employers must gather in order to substantiate their entitlement to the tax credits and advance payments. Employers are required to retain this information for four (4) years, but may store it in any form of their choosing, so long as the information can be inspected and transcribed in the event of an audit.

For every request for paid sick leave or paid family leave under the FFCRA, employers must obtain a written request which identifies:

1. The employee’s name;

2. The date or dates for which leave is requested;

3. A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and

4. A statement that the employee is unable to work, including by means of telework, for such reason.

Additional information is required depending on the reason the employee is requesting the leave:

5A. If the leave request is based on a school closing or child care provider unavailability, the statement from the employee should include:

a. The name and age of the child (or children) to be cared for,
b. The name of the school that has closed or place of care that is unavailable,
c. A representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and,
d. If the child being cared for is older than fourteen, a statement of the special circumstances that necessitate the need to provide care for that child during daylight hours.

5B. If the leave request based on a quarantine order or self-quarantine advice, the statement from the employee should include

a. The name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and,
b. If the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.

Stokes Lawrence has prepared a form to be used for this purpose, downloadable here.

If you have specific questions regarding these policies, contact a member of our Employment Group.