March 23, 2020   //   COVID-19 Tax   //   By Mueller Solutions

Dear valued client,

During the past few days, the Federal government has installed the Families First Coronavirus Response Act PL#116-127, to provide affected individuals with paid sick and family leave and create credits for affected employers. Below is what we know but there is still a lot we don’t know. We are expecting Form 941 to be redesigned to account for the changes listed below. This is a very fluid situation that changes daily and we will send out updates as the information become available.

Emergency paid sick Leave:

  • Private sector employers with fewer than 500 workers (see potential exemption below for employers with fewer than 50 workers) and all public sector employers will be required to provide paid sick leave (two weeks for full-time employees and average hours over a two-week period for part-time employees). Sick leave would be necessary:
    1. to respond to isolation/quarantine order or advisory
    2. for those experiencing COVID-19 symptoms
    3. to care for a family member or a child whose school or place of care is closed due to a public emergency
  • The paid leave is capped at $511 per day for those on leave because of their own health issue and $200 per day for those caring for others.
  • The US Department of Labor (DOL) has the authority to issue regulations to exempt small businesses with fewer than 50 employees. The DOL has until April 2nd to issue guidelines.

Emergency family and medical leave:

Private sector employers with fewer than 500 workers and government entities must provide as many as 12 weeks job-protected leave to employees to care for a child whose school or place of care is closed.

  • The first 10 days could be unpaid, although an employee could choose to use other accrued leave.
  • Employers will be required to pay employees two-thirds of their wages, not to exceed $200 per day or $10,000 in aggregate.
  • Employers with fewer than 50 employees are eligible for an exemption from the requirements where the requirements would jeopardize the viability of the business; however, more information to come as the DOL will be providing emergency guidance and rulemaking to articulate the standard.

Tax credits for paid sick and family and medical leave:

  • Employers will receive a 100% refundable payroll tax credit on the wages required to be paid under such a leave.
  • Also, any additional wages paid due to the leave requirement will not be subject to the employer portion of Social Security/Medicare (FICA) tax.

For more information, please contact your “Accounting Advisor” directly or:

Sheri Highland
Accounting Services Partner
shighland@muellercpa.com
(630) 242-1503