Coronavirus: House Passes Emergency Coronavirus Response Bill Providing For Tax Credits for Sick and Family Leave Payments

Proskauer - Tax Talks

Proskauer - Tax Talks

Today, March 14, 2020, the House overwhelmingly passed an emergency coronavirus response bill (H.R. 6201) with bipartisan support.  The Senate is expected to consider the package next week.  President Trump and Majority Leader Mitch McConnell (R-Ky) both issued statements indicating support for relief measures.

The bill would provide refundable payroll tax credits through 2020 to employers to cover wages paid to employees while they take time off under the bill’s sick leave and family leave programs, for up to 10 days.  The sick leave credit would be for wages up to $511/day or $200/day if the sick leave is to care for a family member or child following the child’s school closing.  The family leave credit would be for wages up to $200/day ($10,000/maximum) while the employee is receiving paid leave.  The credit would not be available for employers receiving a credit for paid family and medical leave under the Tax Cut and Jobs Act. (See Division G of the Bill, Section 7001.)

The bill would also provide for a similar refundable credit against the self-employment tax for up to 10 days.  It would cover 100% of a self-employed individual’s sick-leave equivalent amount, or 67% of the individual’s sick-leave equivalent amount if they are taking care of a sick family member, or taking care of a child following the child’s school closing. The sick-leave equivalent amount would be the lesser of average daily self-employment income, or $511/day to care for the self-employed individual, or $200/day to care for a sick family member or child following a school closing.  (See Division G of the Bill, Section 7002.) Self-employed individuals could receive a family leave credit for as many as 50 days multiplied by the lesser of $200 or their average self-employment income.  (See Division G of the Bill, Section 7004.)

The bill does not include the payroll tax holiday that President Trump and Treasury Secretary Steven Mnuchin proposed earlier this week.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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