U.S. Treasury Department, Internal Revenue Service and the U.S. Department of Labor announced Friday that small and midsize businesses can begin to take advantage of two new refundable payroll tax credits.
These credits are designed to "immediately and fully reimburse them" for the cost of providing Coronavirus-related leave to their employees. The relief falls under the Families First Coronavirus Response Act, which President Donald Trump signed on March 18.
"The act will help the United States combat and defeat COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation will enable employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus," said a joint government statement.
Below are some key points highlighted by the DOL:
· Paid Sick Leave for Workers
For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.
· Complete Coverage
Employers receive 100% reimbursement for paid leave pursuant to the act.
o Health insurance costs are also included in the credit.
o Employers face no payroll tax liability.
o Self-employed individuals receive an equivalent credit.
· Fast Funds
Reimbursement will be quick and easy to obtain.
o An immediate dollar-for-dollar tax offset against payroll taxes will be provided
o Where a refund is owed, the IRS will send the refund as quickly as possible.
· Small Business Protection
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.
For more information, visit Coronavirus Tax Relief on IRS.gov.
