New information available on employer tax credit related to COVID-19

    On March 20, the IRS issued a news release regarding the federal payroll tax credit that will be available to employers with fewer than 500 employees that are required to provide emergency leave and/or paid sick time under the Families First Coronavirus Response Act.

    The release provides that:

    - Employers will be entitled to a refundable credit for their required emergency leave payments (including the cost of providing health insurance coverage for an employee during the employee’s emergency leave period) and emergency sick payments.

    - The credit will be available for federal income tax withholding and the employer and employee portions of the federal Social Security and Medicare taxes.

    - Employers will be able to take immediate advantage of the available credits by retaining the funds they otherwise would be required to use for payroll tax withholdings.

    - If there are not sufficient payroll taxes to cover the employer’s costs for providing the emergency leave and emergency sick pay, employers will be able to file a request for an accelerated refund of their payroll taxes from the IRS, which the IRS expects to process within two weeks or less.

    - Specific IRS guidance regarding the credit will be provided during the week of March 22, 2020.

    Update: Since this writing, the IRS has issued more detailed guidance on the Employee Retention Credit. Read our overview. 


    Dana Fried, JD, LLM, Managing Director, National Tax Services


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      Dana Fried

      JD, LLM, Managing Director - National Tax Services

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