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IRS posts FAQs on paid sick and family leave

By Sally P. Schreiber, J.D.

Please note: This item is from our archives and was published in 2020. It is provided for historical reference. The content may be out of date and links may no longer function.

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The IRS on Friday posted 67 FAQs on the employer tax credits for paid sick and family leave enacted in the Families First Coronavirus Response Act, P.L. 116-127. Businesses with fewer than 500 employees (referred to as “eligible employers”) will obtain funds to provide employees with paid sick leave and family and medical leave for reasons related to COVID-19, either for the employee’s own health needs or to care for family members. The FAQs were updated on Friday to address issues for employers of health care workers and emergency responders.

Under the Families First Coronavirus Response Act, workers may receive up to 80 hours of paid sick leave for their own health needs or to care for others and up to an additional 10 weeks of paid family leave to care for a child whose school or place of care is closed or whose child care provider is closed or unavailable due to COVID-19 precautions. The act covers the costs of the paid leave by providing small businesses with refundable tax credits. Certain self-employed individuals in similar circumstances are entitled to the same credits.

The FAQs are broken up into several sections. The first, “Basic FAQs,” describes the credits generally in 19 Q&As. The next section, FAQs 20–24, explains how to calculate the credit for sick leave, and the next section, FAQs 25–30, explains how to calculate the family leave credit.

FAQs 31–36 describe how to calculate the allocable health care plan expenses for credit purposes. FAQs 37–43 describe how to claim the credit, including by reducing employment tax deposits. The next groups of questions, FAQs 44–59, address special issues for employers and employees.

FAQs 60–66 describe how self-employed people claim the credits. The final question addresses paid sick leave for health care workers and first responders.

The IRS said it will continue to update the FAQs to address changes in the law or additional issues that are raised.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA’s coronavirus resources page.

For tax-related resources, visit the AICPA’s Coronavirus (COVID-19) Tax Resources page.

— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.