New, Non-Mandatory Federal Tax Credit to Offset Costs for Small Businesses Who Provide Paid Sick Leave for Employees to Get Vaccinated or Recover from Vaccinations

Mark Campanale Government Relations Updates, Members Only

April 23, 2021
On April 21, 2021, President Biden announced a new federal tax credit for employers who offer full pay to employees that take time from work to get the COVID-19 vaccine and recover from the after-effects, get tested for COVID-19, and to care for a child whose school or childcare provider is closed. Like other tax credits, there is no requirement that any eligible employer offer the extra paid sick leave or claim the tax credit.

The tax credit applies to employers with fewer than 500 employees. Enacted by Congress in March 2021, this tax credit provides credits for up to 80 hours (that is, 10 workdays) up to $511 per day of paid sick leave that employers offer between April 1, 2021 and September 30, 2021. The tax credits described can be claimed quarterly.

The available paid sick-leave tax credits also apply to time for employees to care for a child whose school or child-care provider is closed, a feature from the March 2020 CARES Act that expired on December 31, 2020. The March 2021 legislation transforms paid sick leave from a mandate to an option, but your business is still eligible for federal tax credits noted above. The Internal Revenue Service released a fact sheet on April 21, 2021 that explains how employers can calculate and claim this sick-leave credit on their quarterly tax returns on IRS Form 941, Employer’s Quarterly Federal Tax Return, and provides links to more detailed information for completing Form 941s. It is possible to request advance tax credits by using IRS Form 7200 for Advance Payment of Employer Credits Due to COVID-19. You can access the IRS Fact Sheet here: https://www.irs.gov/newsroom/employer-tax-credits-for-employee-paidleave-due-to-covid-19.

Team GRC wants to bring you this information in order that you can make the decision on these special paid sick-leave tax credits and claim the credits due to your business on your next quarterly federal return. You should discuss this with your accountant or attorney.

This GRC Update is not intended and should not be construed as legal advice to NPA members. Members should consult their own lawyers for legal advice.
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