IRS Updates FAQs Concerning Tax Credits for Family and Sick Leave

On July 29, 2021, the IRS issued Information Release 2021-160, clarifying that eligible employers can claim tax credits available under the American Rescue Plan Act of 2021 (ARPA) for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.

The tax credits, introduced and made mandatory by the FFCRA until December 30, 2020, and extended and made optional by the CAA and the ARPA to September 30, 2021, are available to employers with 500 or fewer employees who provide those employees with emergency paid sick leave and expanded FMLA for reasons relating to COVID-19. These tax credits reimburse those employers for the wages paid to employees who use this leave. The FAQs contain information about how to calculate and apply for these credits. The original FAQS were discussed in the June 22, 2021, edition of Compliance Corner.

Employers who chose to extend the emergency paid sick leave or the expanded FMLA should be aware of these clarifications.

IRS Information Release 2021-160 »