New Refundable Payroll Tax Credits Available in Response to Coronavirus

According to an IRS press release issued March 20th, a provision of the Families First Coronavirus Response Act (FFCRA) has made available for immediate use two new payroll tax credits to assist employers required to provide paid leave to their employees due to Coronavirus.  The IRS advises that the two new credits, the Paid Sick Leave Credit and the Child Care Leave Credit, will provide employers with relief by allowing them to “retain an amount of the payroll taxes equal to the amount of the qualifying sick and child care leave that they paid” to their employees. Additionally, only employers who have less than 500 employees, amongst other requirements, are eligible to take advantage of the new payroll tax credits. 

Moreover, under the FFCRA, eligible employers may claim a Paid Sick Leave Credit equal to the amount of wages paid to employees who are unable to work due to Coronavirus diagnosis, symptoms or quarantine. The Paid Sick Leave Credit will allow eligible employers to pay their sick employees at their employees’ regular rate of pay, not to exceed $511 per day for a total of 10 days, or $5,110 in the aggregate. Eligible employers may also claim a sick leave credit equal to two-thirds of the wages paid to employees caring for relatives with Coronavirus, or caring for their children due to Coronavirus related closures of schools and child-care facilities. The amount of the sick leave credit claimed for employees caring for relatives or children due to Coronavirus may not exceed $200 per day for up to 10 days or $2,000 in the aggregate, according to the IRS. 

The IRS has also advised that eligible employers may claim a Child Care Leave Credit for up to two-thirds of wages paid to employees who are unable to work due to caring for a child affected by school and child care facility closures in response to Coronavirus. The amount of the credit claimed may not exceed $200 per day for up to ten weeks, or $10,000 in the aggregate. Additionally, the IRS advises that eligible employers may also receive additional relief for “costs to maintain health insurance coverage for eligible employees during the leave period.”

If you have two (2) or more years of unfiled tax returns, payroll tax returns or owe back taxes, call or contact the dual licensed attorney-CPAs at Daniel Rosefelt & Associates to help you get back into compliance with the IRS and resolve your tax debts.