Coronavirus and Taxes Part 4

As of this writing we are all still waiting for Congress to come to an agreement on an economic stimulus package due to the Coronavirus – COVID-19.  While there has been a lot of different proposals floated in the press, I make it a practice to only discuss what is known not what is speculated.  As someone once said to me Facts are our Friends.


Families First Coronavirus Response Act

So here is what we know right now.  Congress passed and the president signed into law on March 18, 2020 the Families First Coronavirus Response Act (ACT).  Here is a brief summary of how this affects employers and employees.  The ACT creates the Emergency Paid Sick Leave Act and expands the Emergency Family and Medical Leave Act.   The following only serves as a summary and you should consult the law for all details to see if everything is applicable to your situation.


Emergency Paid Sick Leave:  The ACT provides for paid sick leave to all employees due to COVID-19 related issues.  The ACT provides that employees of eligible employers (key term) can receive up to 80 hours of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis.  All employees are immediately eligible for paid sick leave.


Emergency Family and Medical Leave:  The ACT provides for an employee who is unable to work because of a need to care for an individual subject to quarantine, care for a child whose school is closed or a child care provider is unavailable for reasons related to COVID-19.  The first 10 days are unpaid but an employee can use accrued paid leave.  After the 10-day (2-week period) employers become obligated to pay full time workers 2/3 of their regular rate of pay for up to ten weeks.  Part time employees are paid 2/3 of their regular rate of the average number of hours worked over the prior 6 months.  Furthermore, the ACT protects the employee’s job and the employee must get back their same job or an equivalent position.   There are exceptions to this rule.


Eligible Employers:  Eligible employers are business and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the ACT.  Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed or child care is unavailable in cases where the viability of the business is threatened.


Employer Credits:  The Eligible employers will be able to claim credits on qualifying leave they provide.  The employer can collect a tax credit equal to 100% of qualified emergency sick leave and family leave payments paid by an employer for each calendar quarter included in the credit is health insurance costs.  Self-employed individuals receive an equivalent credit.  Needless to say, the employer will need to keep proper documentation to provide proof.


Employer Fund Easing:  The employer is allowed to retain and access funds that they would otherwise pay the IRS in payroll taxes.  If these funds are not sufficient to cover the cost, the IRS has indicated that a form to seek an expedited advance will be released by month’s end.


Effective Dates:  The effective dates for the ACT are April 2, 2020 through December 31, 2020.

As more information becomes known I will keep everyone informed.  Feel free to reach out to me to discuss your situation.  Be safe everyone.


Harry E. Hunter


Hunter Consulting, Inc.

March 26, 2020