Enacted on March 18, 2020, the Families First Coronavirus Response Act (the FFCRA) provides tax credits for qualified sick-leave and family-leave wages. These tax credits will apply to qualified wages paid beginning on April 1, 2020, and ending on December 31, 2020. Additionally, the FFCRA states that days occurring during this period will be taken into account for credits for qualified sick-leave equivalent and qualified family-leave equivalent amounts for certain self-employed individuals.

UPDATED FAMILY, MEDICAL, & SICK LEAVE UNDER DIVISION C AND DIVISION E OF THE FFCRA

The FFCRA establishes the Emergency Family and Medical Leave Expansion Act (Division C) and the Emergency Paid Sick Leave Act (Division E). These divisions of the FFCRA require certain employers to provide expanded family, medical, and sick leave to employees that are unable to work (or telework) due to certain circumstances related to COVID-19. Both Acts of the FFCRA are to be administered by the U.S. Department of Labor.

DIVISION G – TAX CREDITS FOR PAID FAMILY, MEDICAL, & SICK LEAVE

Division G of the FFCRA provides for a credit against the tax imposed by section 3111(a) or 3221(a) of the Internal Revenue Code for each calendar quarter in an amount equal to 100% of the “qualified sick-leave wages,” and “qualified family-leave wages” required to be paid under the FFCRA (or the equivalent amounts thereof for certain self-employed individuals).

TAX CREDITS FOR EMPLOYERS WITH FEWER THAN 500 EMPLOYEES

Sections 7001 and 7003 of Division G of the FFCRA provide for refundable tax credits for qualifying employers with fewer than 500 employees. These refundable tax credits pay qualified sick-leave and family-leave wages to their employees, as required under Division C and Division E.

TAX CREDITS FOR SELF-EMPLOYED INDIVIDUALS

Sections 7002 and 7004 of Division G of the FFCRA provide comparable credits for self-employed individuals that are carrying on any trade or business within the meaning of section 1402 of the Code if the self-employed individual would be entitled to receive paid leave under Division C or Division E if the individual were an employee of an employer (other than him or herself).

Accordingly, the refundable tax credits for employers apply to qualified sick-leave and family-leave wages paid for the period from April 1, 2020, to December 31, 2020. Additionally, the self-employment tax credit is determined based on days occurring during the period beginning on April 1, 2020, and ending on December 31, 2020.