May 26, 2020

Coronavirus: House Passes Emergency Coronavirus Response Bill Providing For Tax Credits for Sick and Family Leave Payments

Today, March 14, 2020, the House overwhelmingly passed an emergency coronavirus response bill (H.R. 6201) with bipartisan support.  The Senate is expected to consider the package next week.  President Trump and Majority Leader Mitch McConnell (R-Ky) both issued statements indicating support for relief measures.

The bill would provide refundable payroll tax credits through 2020 to employers to cover wages paid to employees while they take time off under the bill’s sick leave and family leave programs, for up to 10 days.  The sick leave credit would be for wages up to $511/day or $200/day if the sick leave is to care for a family member or child following the child’s school closing.  The family leave credit would be for wages up to $200/day ($10,000/maximum) while the employee is receiving paid leave.  The credit would not be available for employers receiving a credit for paid family and medical leave under the Tax Cut and Jobs Act. (See Division G of the Bill, Section 7001.)

The bill would also provide for a similar refundable credit against the self-employment tax for up to 10 days.  It would cover 100% of a self-employed individual’s sick-leave equivalent amount, or 67% of the individual’s sick-leave equivalent amount if they are taking care of a sick family member, or taking care of a child following the child’s school closing. The sick-leave equivalent amount would be the lesser of average daily self-employment income, or $511/day to care for the self-employed individual, or $200/day to care for a sick family member or child following a school closing.  (See Division G of the Bill, Section 7002.) Self-employed individuals could receive a family leave credit for as many as 50 days multiplied by the lesser of $200 or their average self-employment income.  (See Division G of the Bill, Section 7004.)

The bill does not include the payroll tax holiday that President Trump and Treasury Secretary Steven Mnuchin proposed earlier this week.

© 2020 Proskauer Rose LLP.

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About this Author

David S Miller, Proskauer, derivatives issuance lawyer, cross border lending transactions attorney
Partner

David Miller is a partner in the Tax Department. David advises clients on a broad range of domestic and international corporate tax issues. His practice covers the taxation of financial instruments and derivatives, cross-border lending transactions and other financings, international and domestic mergers and acquisitions, multinational corporate groups and partnerships, private equity and hedge funds, bankruptcy and workouts, high-net-worth individuals and families, and public charities and private foundations. He advises companies in virtually all major industries,...

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Elizabeth Wytock Tax Attorney
Associate

Elizabeth Johnston Wytock is an associate in the Tax Department. Elizabeth earned her J.D. from the University of Virginia School of Law, where she was the executive editor of the Virginia Law Review. While at UVA Law, she worked as a legal intern for the Honorable Nancy Atlas and the Honorable Mary Milloy at the U.S. District Court for the Southern District of Texas.

Prior to law school, Elizabeth served as a health policy program assistant at the National Academy of Sciences in Washington, D.C. She received her B.A. from Georgetown University.

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