Tax Filing Extension and Family First Coronoavirus Response Act

Federal Tax Filing Deadline Deadline Moved To July 15

The IRS is moving its national income tax filing day ahead to July 15 as part of a growing effort to stem the financial pain from the coronavirus pandemic, Treasury Secretary Steven Mnuchin announced Friday.

 “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”

The move gives Americans three months more than they otherwise would have to file their income tax returns.  Taxpayers can still request an extension to October 15th to file returns, as they could in any other year.

This change currently applies only to federal income tax filings.  It is up to states to set their own deadline.  No official word from Connecticut yet, but they did announce that they would conform to the Federal filing dates, so we assume that Connecticut will also delay filing until July 15th as well.  We will keep you posted on any further changes.

Congress Approves Families First Coronavirus Response Act

On March 18, 2020, Congress approved and the President signed into law the Families First Coronavirus Response Act (the Act) in response to the health, economic and other challenges being faced during this global pandemic. The Act’s provisions will affect employers and employees who are impacted by the COVID-19 outbreak. The Act will take effect on April 2, 2020 and most provisions will expire on December 31, 2020.

Here is a brief summary of what two of the Act’s provisions – the Emergency Paid Sick Leave Act, and the Emergency Family and Medical Leave Expansion Act – will mean for employers.

What Employers are Covered?

Covered employers include private sector employers with fewer than 500 employees, as well as government entities.  

• There are regulations that will exempt businesses with fewer than 50 employees from the mandatory paid sick leave and paid FMLA leave provisions of the Act, if complying with the requirements would jeopardize the viability of the business.
• The Secretary of Labor may issue regulations excluding health care providers and emergency responders from coverage.
• In determining whether affiliated entities may count as a single employer for purposes of the 500-employee threshold, it appears that the approach delineated in the federal FMLA regulations will likely apply.

The Emergency Paid Sick Leave Act

The statue requires employers to provide two weeks’ worth of paid sick leave for full-time employees, and  the average number of hours a part-time employees works during a 2-week period, if they are unable to work or telework, in order for the employee to:

• Quarantine or isolate themselves because they have been or may have been exposed to the COVID-19 virus;
• Told by a health care provider to self-quarantine;
• Obtain diagnosis or care and treatment for COVID-19 if symptomatic;
• Care for an individual who has been diagnosed or is in quarantine; 
• Care for a child if the child’s school, place of care, or child care provider is closed due to COVID-19.

Employees who receive emergency paid sick leave due to their own conditions must be paid their normal pay, up to a cap of $511 per day/$5,110 in total. 

If the leave is taken to care for a family member of the employee, the employee shall be paid at two-thirds of their regular rate of pay up to a cap of $200 per day/$2,000 in total. Employers may not require employees to use other available paid leave for emergency sick leave. 

All employees of covered employers are entitled to emergency paid sick, regardless of how long they have worked for the employer. Emergency paid sick leave must be provided in addition to any other paid leave offered by the employer (sick, personal or vacation time or any other paid time off).

The Emergency Family and Medical Leave Expansion Act

The statute creates a new type of “public health emergency” leave under the federal Family and Medical Leave Act.

Employers will be required to provide up to 12 weeks of job-protected leave to employees who are unable to work or telework because they must provide care for a child under 18 whose school or day care has closed because of COVID 19.  An employee must have worked for the employer for at least 30 days to be eligible for Emergency FMLA leave.

• The first 10 days of this leave can be unpaid; but employees will have a right to use other available paid time off for this period.
• After the first ten (10) days, employees will be entitled to receive at least two-thirds of their normal pay during the remaining 10-week leave period, subject to a cap of $200 per day/$10,000 in total.
• As passed, the Emergency FMLA Expansion Act does not provide paid leave to an employee who is unable to work or telework due to his or her own serious health condition.  If the employer employs 50 or more employees, the employee may be eligible for the usual unpaid FMLA leave. 

Tax Credits for Paid Sick and Paid Family and Medical Leave

Employers who paid employees pursuant to the requirements under the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act will receive a payroll tax credit to cover 100% of the wages paid to employees, up to certain limitations.  The credit may be taken on a quarterly basis against the employer portion of Social Security taxes.  

Employers will be required to post notices to their employees of the availability of the paid leave mandated by the statute.  There will be civil penalties for covered employers who fail to provide the leaves required by the Act, or who discriminate or retaliate against employees who seek to use the benefits provided under the law. 

Qualified paid sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter. Qualified emergency family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter.

Furthermore, for those employers that sponsor group health plans, the payroll tax credit may be increased by the amount of “qualified health plan expenses” excluded from an employee’s gross income and that are allocable to qualified sick leave wages or qualified family leave wages in accordance with regulations to be prescribed by the Department of Treasury at a future date.  A “group health plan” means a plan maintained by an employer to provide for health care to employees, former employees, the employer, and others associated with the employer in a business relationship, or their families.  A “qualified health plan expense” is an amount paid or incurred by the employer to provide and maintain the group health plan.

Self-Employed Individuals

Eligible self-employed individuals would be eligible for a refundable credit against income tax for qualified family leave equivalent amounts. An eligible self-employed individual is an individual who regularly carries on any trade or business (as defined in Sec. 1402) and would be entitled to receive paid leave under the Emergency Family and Medical Leave Expansion Act if the individual were an employee