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Employment Tax Credits Under the Families First Coronavirus Response Act

March 27, 2020

The IRS today informed us, in Notice 2020-21, that the tax credits for qualified sick leave wages and qualified family leave wages that are required to be paid by the recently enacted Families First Coronavirus Response Act (the “Act”) will apply to wages paid for the period beginning on April 1, 2020, and ending on December 31, 2020.

Under the Act, which was passed on March 18, 2020, an employer is provided a credit against the employer’s share of Social Security taxes (imposed at 6.2 percent of the wages paid by the employer) for each calendar quarter in an amount equal to 100 percent of the “qualified sick leave wages” and “qualified family leave wages” required to be paid under the Act.

Specifically, the Act provides for refundable tax credits for most employers with fewer than 500 employees that pay qualified sick leave and family leave wages to their employees, as required by the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.

According to the IRS Notice, the refundable tax credits for employers apply to qualified sick leave wages and qualified family leave wages paid for the period beginning on April 1, 2020 and ending on December 31, 2020.

If you have questions about the foregoing or any other provision of the Families First Coronavirus Response Act, or if you would like to discuss how the $2 trillion CARES Act stimulus legislation that was enacted today may affect your business, please do not hesitate to contact Lou Vlahos, Tax Partner at Farrell Fritz or your Farrell Fritz Relationship Partner.

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