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Volume X, Number 191

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Federal Agencies Announce the Availability of Tax Credits Under the Families First Coronavirus Response Act

On March 20, 2020 the U.S. Treasury Department, Internal Revenue Service (IRS) and the Department of Labor (DOL) jointly announced that employers covered by the Families First Coronavirus Response Act (the Act) may now begin taking advantage of the special tax credits designed to reimburse them for providing coronavirus-related leave to their employees. These tax credits are available immediately even though the effective date for the Act is still unclear. The effective date will be no later than April 2, 2020.

The Act covers private employers with fewer than 500 employees, although businesses with fewer than 50 employees may  be eligible for an exemption from the leave requirements under DOL regulations that are still forthcoming. The Act also covers several public employers regardless of size. Benefits under the Act are not available to employees who have been furloughed, laid off or placed on leave for economic reasons, even if those economic reasons are tied to the coronavirus pandemic. Read Varnum's full summary of the Act, which was signed into law by President Trump on March 18: President Trump Signs the Families First Coronavirus Response Act

The joint announcement from the Treasury, the IRS and the DOL means that eligible employers may take immediate advantage of the paid leave credits in the form of a dollar-for-dollar offset against certain payroll taxes. If the amount of leave paid pursuant to the Act exceeds the amount of certain payroll taxes owed for all of the employer's employees, the excess is treated as an overpayment and is refundable. Leave amounts, and the corresponding tax credits, are subject to daily caps. Employers may also take a tax credit for the amount of the employer's qualified health plan expenses that may be properly allocated to the employee's coronavirus-related leave under the Act.

Importantly, the agencies' announcement also states that the DOL will be issuing a temporary 30-day, non-enforcement policy, giving employers time to come into compliance with the Act. This 30-day period may start from the date of enactment, but could also start from some later effective date. During this time employers must still act reasonably and in good faith to comply with the Act.

© 2020 Varnum LLPNational Law Review, Volume X, Number 83


About this Author

Maureen Rouse-Ayoub Labor Employment Attorney

Maureen represents clients in all areas of labor and employment. She advises clients on labor management relations including union election proceedings, collective bargaining and contract enforcement in arbitration and before the National Labor Relations Board. Maureen defends employment-related claims including discrimination, sexual harassment, wrongful discharge, Whistleblowers' and Fair Labor Standards Act violations in federal and state courts, administrative proceedings and arbitration hearings. She counsels clients on drafting, implementation and enforcement of workplace policies....

Elizabeth Wells Skaggs, labor and employment attorney, Varnum

Beth is a partner in the labor and employment practice group, focusing employment issues and litigation. She has counseled business clients on a variety of matters affecting the workplace, including effective employee handbooks and policies, disciplinary and dispute resolution procedures, discrimination issues, disability accommodation, wage-hour matters, family medical leave, harassment prevention and litigation avoidance.  When litigation is unavoidable, Beth has significant experience representing employers under the numerous state and federal statutes that govern the employment relationship, including the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Family and Medical Leave Act.  Beth has experience in both single-plaintiff cases and complex class and collective actions.

Ashleigh E. Draft Associate Grand Rapids Labor & Employment

Ashleigh is an associate attorney currently working with the labor and employment group. She also works with higher education clients and provides support on a variety of litigation matters.

Ashleigh’s experience includes serving as a legal extern for the Michigan Court of Appeals Research Division. She also clerked for Michigan Appeals Court Judge Jane Beckering. Prior to law school, Ashleigh served organizations in the higher education and nonprofit sectors in various development and communications roles. 

Barbara Moore, Varnum, employment lawyer

Barbara is an associate currently working with Varnum's Labor and Employment Team. She has experience with issues related to workplace policies, discrimination in the workplace, the ADA and FMLA, and state and federal wage-hour matters. Barbara also serves the Business and Corporate Services Practice Team by providing assistance with mergers and acquisitions.

Within the community, Barbara serves as a volunteer with the Tutor Mate program and has experience working on pro bono matters.