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Notice 2020-21: Employment tax credits for certain paid leave (COVID-19)

Employment tax credits for certain paid leave, COVID-19

The IRS today released an advance version of Notice 2020-21 as guidance concerning tax credits for paid leave required to be paid by the “Families First Coronavirus Response Act” (also referred to as the “phase 2” coronavirus or COVID-19 legislation).

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The “phase 2” coronavirus legislation includes temporary tax credits for certain employers and self-employed individuals for emergency paid leave. The legislation refers to a period beginning on a date within the 15-days of enactment (March 18, 2020). Today’s notice states that this beginning date is April 1, 2020.

Accordingly, Notice 2020-21 [PDF 39 KB] provides that:

  • The employment tax credits will apply to eligible wages and compensation paid for periods beginning on April 1, 2020, and ending on December 31, 2020.
  • Days beginning on April 1, 2020, and ending on December 31, 2020, will be taken into account for credits for paid qualified sick leave equivalents and paid qualified family leave equivalents for certain self-employed individuals.

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