June 13, 2021

Volume XI, Number 164

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June 10, 2021

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IRS Issues Guidance to Employers to Claim Tax Credits for Voluntary Leave Related to COVID-19 and the Vaccine

As set forth in the American Rescue Plan Act of 2021 (ARP), employers and certain governmental employers are allowed to claim refundable tax credits that reimburse them if they choose to provide paid sick and family leave due to COVID-19, including leave taken to receive and/or recover from COVID-19 vaccines.  The Internal Revenue Service (IRS) recently issued a fact sheet further explaining how employers may claim those tax credits.  The ARP tax credits are available from April 1, 2021, through September 30, 2021.

The IRS defines eligible employers for the ARP tax credits as follows:

  • Any business, including a tax-exempt organization, with fewer than 500 employees;

  • A governmental employer, other than the federal government; and

  • Any agency or instrumentality of the federal government that is not an organization described in section 501(c)(1) of the Internal Revenue Code.

Employers that choose to provide this leave may claim tax credits for any wages paid for leave taken by employees who are unable to work or telework due to reasons related to COVID-19, including leave taken to receive COVID-19 vaccinations.  Employees may also take leave to recover from any injury, disability, illness, or condition related to the vaccinations.

The expansion of eligible employers receiving tax credits is certainly enticing for employers to continue providing COVID-19 related paid time off for their employees.  Eligible employers may encourage their employees to get vaccinated and even provide a paid day off.  The employer would then receive a tax credit equal to the wages paid to employees for that day. Providing paid leave for COVID-19 vaccines and any vaccine related side effects may help encourage additional Wisconsinites to receive the vaccine.  As noted above, the time period began April 1, 2021, and continues through September 30, 2021.  Davis|Kuelthau will update you if this time period is extended or any other future tax credits are offered to employers.

© 2021 Davis|Kuelthau, s.c. All Rights ReservedNational Law Review, Volume XI, Number 125
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About this Author

 Abby S. Tilkens Davis Kulthau Associate Labor Employment School and Higher Education
Associate

 

Abby is a member of the firm’s Labor & Employment team and the School and Higher Education practice group in Green Bay. Her practice primarily focuses on counseling education clients in school law and labor and employment issues.

Prior to joining the firm, Abby attended the University of Wisconsin-Madison and was a student athlete on the Women’s Golf team before heading off to Valparaiso University School of Law on a full scholarship. While at Valparaiso, Abby was a member of the University School of Law Honors program, an associate editor of the Law Review and the...

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