March 30, 2020 - Congress recently passed the “Families First Coronavirus Response Act” (“FFCRA”, Act”) that requires certain employers with less than 500 employees to provide COVID-19 related sick and family leave to their employees. The Act also provides a refundable employment tax credit for those employers (See “Whitley Penn Tax Alert: “Tax Credits in Coronavirus Relief Act for Employer Sick and Family Leave Benefits” dated March 20, 2020 and subsequent related tax alerts on our website’s COVID-19 page). The IRS has now released Notice 2020-21 that establishes the date on which the employment tax credit rules are effective.
The FFCRA stated that the employment tax credit provisions would be effective on a date selected by the Secretary of the Treasury which would not be later than 15 days after the effective date of the Act. Notice 2020-21 confirms that the effective date is April 1, 2020. This date is coordinated with the Department of Labor’s (“DOL”) effective date for the underlying emergency sick and family leave rules that were instituted in the FFCRA. Accordingly, the employment tax credit provisions apply to qualified sick leave wages and qualified family leave wages that are paid during the period beginning April 1, 2020 and ending December 31, 2020.
The DOL has also issued a Q&A list that is intended to assist employers with the practical application of the emergency sick and family leave rules that were enacted in the FFCRA. The Q&A is available on the DOL website:
Whitley Penn is continually monitoring all COVID-19 related developments and will issue additional tax alerts as those developments occur. In the interim, please contact your Whitley Penn Tax Advisor if you have any questions or require any additional information.