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Tax relief for paid leave in “phase 2” coronavirus legislation (COVID-19)

Tax relief for paid leave coronavirus legislation

President Trump on March 18, 2020, signed into law H.R. 6201, the “Families First Coronavirus Response Act”—the so-called “phase 2” coronavirus bill—that requires certain employers to provide emergency paid sick leave and expanded paid leave under the Family and Medical Leave Act and includes refundable tax credits against a non-governmental employer’s payroll tax for 100% of the leave paid.

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The leave requirements and related tax credits apply to all private entity employers—including private tax-exempt employers—employing fewer than 500 employees. The leave requirements also apply to all public agency employers, regardless of the number of employees (a category that includes any state or local government or an agency  thereof), but the public agency employers do not appear to be eligible to claim the tax credits.

The Secretary of Labor is authorized to provide exclusions for certain health care providers and emergency responders and to exempt small businesses with fewer than 50 employees in certain cases.

Read a KPMG report about the tax provisions in the bill passed by the House with amendments (that were not changed in the final legislation): TaxNewsFlash
 

What’s next?

Congress and the White House have already begun discussions of further COVID-19-related legislation that could include additional tax provisions, including charitable giving incentives. Read TaxNewsFlash and read TaxNewsFlash.
 

Documents

  • Read a technical explanation of the law, provided by the JCT: JCX-10-20
  • Read text of H.R. 6201 [PDF 364 KB] (121 pages)
  • Read a revenue estimate provided by the JCT: JCX-9-20 

 

For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

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