IRS Designates April 1, 2020 as the = Beginning Date=20 for Credits for Paid Sick Leave and Paid Family Leave
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The Families = First=20 Coronavirus Response Act (the =E2=80=9CCoronavirus Response = Act=E2=80=9D), P.L. 116-127, enacted=20 on March 18, 2020, requires certain employers to provide expanded family = and=20 medical leave and paid sick leave to employees unable to work or = telework due to=20 certain circumstances related to COVID-19. To offset the economic = costs of=20 these requirements, the Coronavirus Response Act provides a subsidy to = small=20 employers (generally, fewer than 500 employees) in the form of a tax = credit for=20 certain paid sick or family leave relating to the COVID-19 = outbreak.
&nbs= p; The=20 tax credit is a credit against the 6.2% excise tax paid during each = calendar=20 quarter under Section 3111(a) or 3221(a) of the Internal Revenue Code of = 1986,=20 as amended (the =E2=80=9CCode=E2=80=9D). The Coronavirus Response = Act provides a similar=20 credit against the comparable tax paid for self-employed individuals = under=20 Section 1402 of the Code. The tax credit generally equals 100 = percent of=20 the =E2=80=9Cqualified sick leave wages=E2=80=9D and =E2=80=9Cqualified = family leave wages=E2=80=9D required to=20 be paid under the Coronavirus Response Act, subject to = limitations. The=20 tax credits are only available to wages paid with respect to a time = period=20 commencing on a date designated by the Secretary of the U.S. Department = of the=20 Treasury. The Secretary is required to designate the beginning = date within=20 15-days of enactment of the Coronavirus Response Act.
&nbs= p; On=20 March 27, 2020, the IRS issued Notice 2020-21, 2020-16 IRB (March 27, = 2020),=20 designating the covered period as beginning on April 1, 2020. = Thus, the=20 tax credits will apply to wages paid for the period beginning on April = 1, 2020,=20 and ending on December 31,=20 2020.
&nb= sp; =20 The CARES Act provides for advance refunding of these credits that were=20 established under the Coronavirus Response Act. The CARES Act = further=20 grants the IRS broad authority to issue regulations or other guidance = permitting=20 the advancement of the credits. =20Related Services
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