American Rescue Plan Tax Credits for Employers Who Voluntarily Provide FFCRA Leave – Supplement
This is a Supplement to our post on March 24, 2021 regarding Section 9641 of the American Rescue Plan Act of 2021 (the “ARPA”). This Supplement addresses state and local governmental employers.
Section 9641 of the Rescue Plan makes available tax credits to offset the costs borne by certain employers who voluntarily provide emergency paid sick leave and emergency paid family leave to employees for certain types of covered absences occasioned by the pandemic, from April 1, 2021 through September 30, 2021.
Prior to April 1, 2021, no tax credits were provided for state and local government employers who were either required to provide leave under the Families First Coronavirus Response Act (FFCRA) during 2020, or did so voluntarily from January 1, 2021 through March 31, 2021.
However, Section 9641 of the ARPA does appear to extend the availability of tax credits to state and local governmental employers who voluntarily provide FFCRA leave from April 1, 2021 through September 30, 2021.
It appears that a state or local governmental employer must meet all of the relevant provisions of the FFCRA, as amended by the ARPA, in order to qualify for the credits, including the “nondiscrimination” rules contained in Internal Revenue Code Sections 3131(j) and 3132(j). Please see our March 24, 2021 post for additional details.
As of this date, the IRS has not updated Questions and Answers on its web site pertaining to FFCRA credits to reflect the passage of the ARPA. Thus, we have not seen an official acknowledgement of the foregoing. Thus, state and local governmental employers should stay tuned for further guidance from the IRS.