Families First Coronavirus Response Act: Tax Relief & Deferred Tax Payments

Smolin Update May 20, 2020

On March 18, 2020, the Senate passed an amended Families First Coronavirus Response Act (H.R. 6201) and sent it to the President’s desk. The President signed the bill into law later that day.

Meanwhile Congress is far along in considering a third, and significantly larger, stimulus and relief bill.

PAID LEAVE

The new law requires employers with fewer than 500 employees to provide paid sick leave to employees who are forced to stay home due to quarantining or to care for a family member (“qualified paid sick leave”) or to care for a child if the school or place of care is closed (“qualified family leave”).

In the case of sick leave wages paid by an employer to an employee, the employer receives a refundable credit against its share of either the OASDI and the RRTA portion (as applicable) of the payroll tax. The credit can be claimed on a quarterly basis, equal to 100% of the amount of sick leave wages paid under the new law. The amount of the credit is limited to $200 per day, which can in certain scenarios be up to $500.

PENALTY AND INTEREST WAIVER

The IRS issued guidance providing that it would waive penalties and interest on tax payments due on April 15 for 90 days, though not postponing the due date for filing a 2019 tax return. The waiver only applies to an individual’s first $1 million in taxes owed and a corporation’s first $10 million in taxes owed.

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