The U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor announced that small and midsize employers could begin to take advantage of two new refundable payroll tax credits, provided under the Families First Coronavirus Response Act signed on March 18, 2020, and effective April 1, 2020. These credits will reimburse businesses with fewer than 500 employees for the cost of providing Coronavirus-related leave to their employees.
Here are some key takeaways on the Response Act:
Paid Sick Leave for Workers:
- Eligible employers may receive a refundable sick leave credit for sick leave of COVID-19 related reasons at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days (80 hours).
- Eligible employers may receive a refundable child care credit equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit.
Complete Coverage: employers receive 100% reimbursement for paid leave pursuant to the Act.
- Health insurance costs are also included in the credit.
- Employers face no payroll tax liability.
- Self-employed individuals receive an equivalent credit.
Fast Funds: reimbursement will be quick and easy to obtain.
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.
Easing Compliance: requirements subject to 30-day non-enforcement period for good faith compliance efforts.
To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week. For additional information, please visit Coronavirus Tax Relief on IRS.gov, the FFCRA site on DOL.gov, or contact us directly.
Additionally, the following relief programs have been put into place by the Small Business Association (SBA) and the State of Florida, which your business may be eligible for:
- The SBA is offering designated states and territories low-interest federal disaster loans for working capital (up to $2 million) to small businesses suffering substantial economic injury as a result of COVID-19.
- The State of Florida has activated the Emergency Bridge Loan Program for businesses impacted by the virus, which will allow businesses to receive short-term and interest-free loans up to $50,000.
If you have doubts as to whether or not your business qualifies for these loans or claims, please do not hesitate to contact us. We will also be available if you need any help to complete the required paperwork.
Moreover, we are urging our Clients to reach out to us if their Business Continuity insurance does not include a “communicable disease” exception.
Again, we hope to be of help in any way possible during these difficult times. Please do not hesitate to contact us for any other questions or concerns.