On April 1, 2021, the Congressional Research Service (CRS) updated its Payroll Tax Credit for COVID-19 Sick and Family Leave report, providing details regarding the payroll tax credits associated with the extended paid leave originally provided by the Families First Coronavirus Response Act (FFCRA) available through the American Relief Plan Act of 2021 (ARPA).

The report summarizes the history of the payroll tax credits, noting the requirements under the FFCRA, the Consolidated Appropriations Act of 2021 (CAA) and the ARPA. As background, the FFCRA required certain employers to provide paid leave via emergency paid sick leave (EPSL) and expanded FMLA for specified reasons. The CAA extended the tax credits related to EPSL and expanded FMLA through March 31, 2021, but extending the FFCRA leave was optional for employers. The ARPA further extended the FFCRA-related tax credits now through September 30, 2021 (again, if an employer chooses to allow such leave).

In particular, the report highlights a few modifications provided by the ARPA related to the payroll tax credits, including:

The 80-hours of EPSL resets for leave taken after March 31, 2021.

Expanded FMLA per-employee limit is increased to $12,000.

Payroll tax credits are available for sick leave taken to receive a COVID-19 vaccine (or for leave taken while waiting for COVID-19 test results).

State and local governments, as well as certain non-profits, can claim the payroll tax credit.

Payroll tax credits are claimed against the Medicare (HI) tax.

If paid leave is permitted, it must be provided to all employees who qualify.

The report further explains that under the FFCRA, payroll tax credits were not available to state and local government employers (including school districts and public colleges), even though such employers were required to provide leave. However, ARPA allows certain government employers access to the payroll tax credits if they voluntarily choose to provide paid leave described above.

While the report does not provide any new guidance, it serves as a reminder of the payroll tax credits available for employers who choose to permit paid leave through September 30, 2021.

Disclaimer: EBI and any of its employees do not provide legal or tax advice. Compliance, regulatory and related content is for general information purposes and is not guaranteed to be accurate or complete. We recommend you should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.