Employer Tax Credits Available in Coronavirus Response Bill

The Families First Coronavirus Response Act, signed by President Trump on March 18, includes temporary modifications to the Family Medical Leave Act (FMLA) and paid sick leave benefits to expand coverage for patients and caregivers affected by the Coronavirus (COVID-19).

This legislation applies to all employers with 500 or fewer employees. However, it does include some relief for both small and mid-size businesses to offset the financial burden.

For small businesses (fewer than 50 employees), the Labor Department has the option to exempt workers if it determines that providing paid leave “would jeopardize the viability of the business as a going concern.”

Any employer with 500 employees or less who provides FMLA or sick leave benefits under the bill is entitled to a credit against its portion of the Social Security payroll tax. The credit can be claimed on a quarterly basis, equal to 100 percent of the amount of sick leave wages paid under the bill’s sick leave and family leave programs.

The sick leave credit for each employee is limited to $511 per day for sick leave or $200 per day to care for a family member or child whose school is closed. The family leave credit for each employee is limited to $200 per day with a maximum of $10,000.

Other limitations apply, including the number of days per employee and the dates that the wages are paid. The credits are refundable to the extent they exceed the employer’s payroll tax.

What’s Next for Business Relief?

According to the Treasury Department, the so-called “phase three” proposal will include $50 billion to aid the hard-hit airline industry, $150 billion for other distressed sectors of the economy, two rounds of direct payments to individual taxpayers on April 6 and May 18 totaling $250 billion each (payments based on income level and family size), and the creation of a small business interruption loan program totaling $300 billion for borrowers with 500 employees or less (loans equal to 100% of 6 weeks payroll, capped at $1,540 per employee).

Jeffrey G. Cohen Jeffrey G. Cohen, CPA is the Partner-in-Charge of Tax Services at Grassi. With over 30 years of experience, Jeff specializes in serving companies within the Manufacturing and Distribution Industry, with an emphasis on the Food & Beverage and Pharmaceutical sectors. A leading tax expert in the New York Metropolitan area, Jeff has enabled his clients to realize significant tax savings through proper Income and... Read full bio