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While most Americans are checking their bank accounts for a stimulus check, employers should be aware of the extensions and expansions of the latest COVID-19 legislation allowing for additional tax credits for voluntarily providing COVID-19 paid sick and family leave.
On March 11, 2021, the President signed the American Rescue Plan Act into law and with it extended potential tax credit for employers. The 2021 Consolidated Appropriations Act (CAA) gave employers the option to decide whether their company would provide paid leave, which was originally mandated under the Families First Coronavirus Response Act (FFCRA) and expired December 31, 2020. The American Rescue Plan Act extends CAA’s voluntary decision allowing employers to offer paid leave and receive tax credits for employees leave between March 31, 2021 and September 30, 2021. In addition to providing paid sick and family leave related to COVID-19 symptoms, the American Rescue Plan Act expands qualifying reasons for leave, including receiving immunization related to COVID-19 and recovering from any injury, disability, illness or condition related to receiving that vaccination. The latest law also allows tax credit for paid leave when an employee is seeking or awaiting the result of a diagnostic test or medical diagnosis for COVID-19 or if their employer has requested such a test or diagnosis.
In addition to the expansion for potential voluntary tax credits to the employer, the American Rescue Plan Act includes non-discrimination language and disqualification for receiving the credits should an employer discriminate and withhold paid leave to its employees based upon compensation level, full-time employee status or employees on the basis of tenure with the company. Employers must uniformly provide paid sick and family leave related to COVID-19 symptoms, testing and immunization to all employees to be eligible for the associated tax credits. The Act calls for an all or nothing approach as it relates to the paid leave and receipt of tax credits.
Another potential tax credit for employers includes voluntarily providing an additional ten (10) days of FFCRA paid sick leave beginning April 1, 2021. While employers are not required to provide the additional ten (10) days, they would be eligible for additional credits by doing so.
The American Rescue Plan Act provides voluntary tax credits for employers. However, they should remain on alert for new legislation focused on mandating additional protections for employees related to COVID-19 as referenced during the campaign of the current Administration.
For more information, please contact Bill Catto at [email protected].