UPDATED: Families First Coronavirus Response Act

The President signed into law on March 18 the Families First Coronavirus Response Act, which expands Medicaid and unemployment benefits, provides free Coronavirus testing and mandates paid sick leave and childcare leave – but only for certain employees.

What should business owners know about the bill?

The bill requires employers to provide two weeks of paid sick leave to employees who are unable to work (or telework) due to a COVID-19 event if:

  • The employee is subject to a Federal, State or local quarantine or isolation related to COVID-19
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
  • The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
  •   The employee is caring for an individual who is subject to an order described above
  • The employee is caring for a son or daughter if their school or daycare has been closed due to COVID-19 precautions

Paid sick time is calculated based on the employee’s compensation or the number of hours that would normally be worked; not to exceed $511 per day and $5,110 in the aggregate for each employee.  Specific calculations are provided for employees who work variable hours from week to week.

Companies with more than 500 employees are exempt, and businesses with less than 50 employees may apply for a hardship waiver.

  • The Family and Medical Leave Act has been expanded with respect to COVID-19 events and requires employers to pay 2/3 of wages, up to $200 per day and capped at $10,000 in the aggregate for a qualifying COVID-19 event for eligible employees.
  • The Act expands the definition of eligible employees to include those who have been employed at least 30 days (only for a COVID-19 event)
  • The paid leave covers employees who are unable to work due to the need to care for a minor child due to the closure of schools or daycare
  • The expansion applies to business with over 50 employees but under 500 employees
  • To help offset the cost of emergency paid sick leave, a payroll tax credit is available to employers equal to 100% of qualified emergency paid sick and paid family leave wages paid. The credit cannot exceed, with respect to any employee, $511 per day for paid sick leave and $200 per day for paid family and medical leave. Excess credits may be refundable, however, certain limitations apply.

Other provisions of the bill, which may benefit your workforce, include:

  • Enhanced unemployment insurance for employees who lose their jobs or are laid off due to the Coronavirus outbreak
  • Requires private health plans to provide coverage for Coronavirus diagnostic testing at no cost to the consumer and increases funding for Medicaid programs
  • Funding and waivers to allow schools to continue to provide meals to students while schools are closed due to the outbreak. In addition, there have been enhancements to SNAP and support for food banks.

This law is known as Phase 2.  The House and Senate are expected to start negotiations on a much broader stimulus package, which will be Phase 3.

IRS Extends Due Date for Federal Income Tax Payments to July 15

The Treasury Department and IRS are extending the due date for the payment of Federal income taxes otherwise due on April 15, 2020, until July 15, 2020, as a result of the ongoing Coronavirus (COVID-19) emergency. The extension is available to all taxpayers and automatic. Taxpayers do not need to file any additional forms or contact the IRS to qualify for the extension. The filing deadline for tax returns remains April 15, 2020, and the relief only applies to the payment of Federal income taxes. Penalties and interest on any remaining unpaid balance will begin to accrue on July 16, 2020.

Dollar Limits

The due date for making Federal income tax payment otherwise due April 15, 2020, for any taxpayer is automatically extended until July 15, 2020. The extension is limited to a maximum applicable amount:

  • up to $1 million for individuals, regardless of filing status, and other unincorporated entities such as trust and estates; and
  • up to $10 million for each C corporation that does not join in filing a consolidated return or for each consolidated group.

Federal Income Tax Payments Only

The relief is available for Federal income tax payments, including payments of tax on self-employment income, otherwise due on April 15, 2020. Thus, it applies to the payment of Federal income taxes for the 2019 tax year, as well as estimated income tax payments for the 2020 tax year that are due on April 15, 2020.

The extension is not available for the payment or deposit of any other type of Federal tax. It also does not extend the time for filing any income tax or information return otherwise due on April 15, 2020. The IRS has reminded taxpayers that if the April 15, 2020 filing deadline cannot be met, they are eligible to request a six-month extension to file an income tax return. However, taxpayers do not need to request an extension to file to receive the automatic extension for the payment of Federal income taxes otherwise due on April 15, 2020.

Taxpayers are urged to check with their state tax agencies for details of any delays in filing and paying state taxes. See Tax Filing and Tax Payment Relief for Coronavirus/COVID-19 Pandemic for a summary of filing delays allowed by the federal and state governments.

Penalties and Interest

Any interest, penalty, or addition to tax for failure to pay Federal income taxes postponed will not begin to accrue until July 16, 2020. The period from April 15, 2020, to July 15, 2020, will be disregarded but only for interest, penalties, or additions to tax up to maximum dollar amounts ($1 million/$10 million).

Interest, penalties, and additions to tax will continue to accrue from April 15, 2020, on the amount of any Federal income tax in excess of the maximum dollar amounts. Taxpayers subject to penalties or additions to tax that are not suspended may seek reasonable cause under Code Sec. 6651 for failure to pay tax.

Individuals and certain trusts and estates may also seek a waiver to a penalty under Code Sec. 6654 for failure to pay estimated income taxes. Similar relief is not available for estimated tax payments by corporations or tax-exempt organizations for the penalty under Code Sec. 6655.

Notice 2020-17

Grant, Millman & Johnson will keep you updated as legislation is passed.