Benefit News

IRS Releases FAQs on Tax Credits for Paid Sick and Family Leave

June 22, 2021

On June 11, 2021, the IRS released new FAQs about tax credits for eligible employers who voluntarily provide paid employee leave under the Families First Coronavirus Response Act (FFCRA). The FFCRA paid sick and family leave requirements themselves expired December 31, 2020, but subsequent legislation, most recently the American Rescue Plan Act (ARP), extended and enhanced the tax credits available for employers that choose to provide FFCRA leave taken by employees through September 30, 2021.

The New FAQs

There are 123 new FAQs, divided into 16 subtopics. The FAQs include information on how employers may file for and compute the applicable credit amounts and how to receive advance payments for and refunds of the credits. They clarify the following issues, among others:

  • Daily and aggregate wage limits do not include health plan expenses or the employer’s share of Social Security and Medicaid taxes.
  • Qualified leave wages do not include federal taxes on the wages.
  • The last day an employer may file for advance payment of the credit.
  • The credit may apply for leave between April and September 2021, even if the employer did not pay the employee initially.
  • Employers must collect and maintain specific information from employees (and may require more than that specified) to substantiate eligibility for the credits. Records must be kept for six years.

NOTE: The tax credits apply to employers with fewer than 500 employees (and certain governmental employers without regard to the number of employees) and are refundable and advanceable. Wages are subject to daily and total limits.

For additional information, please contact your Burnham Consultant or Burnham, A Baldwin Risk Partner at 949‐833‐2983 or inquiries@burnhambenefits.com.


Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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