Skip to main content

Summary of the Families First Coronavirus Response Act

By
The “Families First Act” requires virtually all small employers to extend sick leave to affected employees, but a tax credit will help small business and not-for-profit organization employers pay for it.

Following are the most critical provisions, we believe, for small employers:

·    1. Public Health Emergency Leave (Division C of the Act effective April 2, 2020) – Small employers who have “employees who are unable to work (including telework) due to a need to care for a child under age 18 if school or child care is unavailable due to a public health emergency” are required to:
o  Provide paid leave “if needed by any employee who has been employed at least 30 calendar days,”
o   Pay them “at a rate no less than two-thirds of the regular rate of pay” for public health emergencies declared by a federal, state or local authority that extend beyond 10 days (“employees may be required to use existing accrued leave during the first 10 days”).
·   
     2. Paid Sick Leave (Division E of the Act effective April 2, 2020) – Small employers are required to pay immediate paid leave (no 10-day waiting period as under Division C cited above):
o   For full-time employees, 80 hours, and for part-time employees, two weeks based on average hours worked.
o   Triggered if an employee is unable to work (or telework) due to:
1.   Self-care leave for federal, state or local quarantine or isolation order related to COVID-19, advice of a health care provider, or to obtain a medical diagnosis if the employee has COVID-19 symptoms (at employee’s regular rate of pay up to $511 per day), or
2.   Family-care leave in order to care for someone needing the first two “self-care” categories, or care for a son or daughter if the school or place of care has been closed due to COVID-19 (exemptions may be available for businesses less than 50 employees whose “viability” could be jeopardized) (at two-thirds employee’s regular rate of pay up to $200 per day).

·    3. Federal funding for small employers
o   The wages paid under the Families First Act” would not be subject to the employer portion of social security tax (6.2% of gross wages).
o   A refundable credit against payroll taxes for wages paid to employees for paid leave under Division C or E. Similar benefits are available to self-employed people but beyond the scope of this post at this time.

·    4. Employers may also be able to reimburse employees for additional costs they incur due to the COVID-19 emergency without reporting those reimbursements as employee wages (“qualifying disaster relief payments”).

This summary (honestly) is brief, but represents our best attempt to quickly share some important information with small employers.

Comments

Post a Comment

Popular posts from this blog

Church Car Purchase for Pastor

By
Question: A church would like to purchase a car for the pastor's use. What is the best method to accomplish this goal? Should the car be titled in the pastor's name? What will be the tax consequences of this arrangement? Answer: The church has two main alternatives for this purchase:  Title the car in the pastor's name and reimburse him for business expenses Title it in the church's name and treat personal use as taxable compensation There are fewer immediate tax consequences for the latter. Since both are viable options, we will discuss both situations in this post. If the church chooses to give the car to the pastor and register it in his name, he is free to use it for whatever personal use he desires with no tax consequences. However, the fair value of the car is taxable as compensation at the time it is given to the pastor. Internal Revenue Code section 102(c) clearly states that gifts given to employees by their employers are taxable compensation. The...
2 comments
Read more

Rental of a Church Parsonage to a Non-Minister

By
Question: A church owns a parsonage, but the pastor does not use it as he owns his own home. The church rents the parsonage to a tenant other than a minister or employee of the church. Will the church be responsible for paying income tax on these monies as Unrelated Business Income (filing a Form 990-T) even if the money is used to carry on the business of the church? Answer: Whether the money is used for church purposes is irrelevant.  IRS Publication 598  states: "If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business." Fortunately, in the case of rental income from real property, such income is "excluded in computing unrelated business taxable income" (Publication 598). Caution: see content below regarding debt-financed property.  However, a second concern not a...
Post a Comment
Read more

Can Form 4361 be filed after the deadline?

By
Question:   Is it possible to opt out of Social Security after the 2-year deadline? Answer:  Unlike other employees, a licensed or ordained minister has the option to opt out of Social Security and Medicare (FICA). If a minister wants to opt out they must file Form 4361 by the tax deadline including extension, in the second year in which they have received ministerial income of $400 or more. This election is final, and the minister cannot opt back into FICA taxes.  At MinistryCPA, we have received questions from ministers who have exceeded the two year deadline and desire to opt-out. There have been several court cases which provide guidance in answering this question. Some have argued that the minister was unaware of the deadline, had mistakenly believed they had filed a timely election, were given incorrect advice by an IRS employee, or their opposition to participate in Social Security and Medicare did not arise until after the 2-year deadline had passed. In each of th...
Post a Comment
Read more