On March 18, 2020, H.R. 6201, the “Families First Coronavirus Response Act” (“the Act”), was signed into law. The Act provides emergency supplemental appropriations to support Americans during the COVID-19 pandemic. Sections of the Act provide for paid leave and enhanced unemployment benefits for workers affected by COVID-19, and temporary tax credits for certain employers and self-employed individuals in relation to the payment of those benefits.
On March 18, 2020, U.S. President Donald Trump signed into law H.R. 6201, the “Families First Coronavirus Response Act” (“the Act”), to provide emergency supplemental appropriations to support Americans during the COVID-19 pandemic.1 Sections of the Act provide for paid leave and enhanced unemployment benefits for workers affected by COVID-19, and temporary tax credits for certain employers and self-employed individuals in relation to the payment of those benefits.
The Act provides significant relief to businesses that otherwise may not be able to afford the costs associated with coronavirus-related paid leave and provides certain benefits to employees, e.g., up to 80 hours (or the equivalent for part-time employees) of paid sick time, that could help them meet the current health challenges they may be facing.
The Act creates a new category of benefits and includes two new programs: the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act. These two programs take effect April 2, 2020, and remain in effect through December 31, 2020. In connection with these two programs, the Act includes several employer tax credits to cover the cost of wages paid to employees under the programs and provides similar credits against self-employment tax.
The Act applies to private businesses with fewer than 500 employees. (Special rules apply in the case of employment under certain multi-employer bargaining agreements.) 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 “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
An eligible self-employed individual is allowed a similar refundable credit against the self-employment tax with respect to qualified sick leave and qualified family-leave-equivalent amounts. To qualify, an individual generally must regularly carry on a trade or business and must have met the criteria that would apply to receive paid leave pursuant to the Emergency Paid Sick Leave Act if the individual were an employee of an employer.
The Act provides that any wages required to be paid by reason of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act will not be considered wages for FICA purposes.
1 For the text of bill H.R. 6201 and its status, see www.Congress.gov website at: https://www.congress.gov/bill/116th-congress/house-bill/6201 . (Congress.gov is the official website for U.S. federal legislative information.)
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
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