Intended to provide direct relief to small businesses, the ARP employer tax credit provides an excellent opportunity for employers to reduce their tax liability.
Small business owners may be eligible for additional financial relief to assist in recovery from the COVID-19 pandemic under the new American Rescue Plan (ARP) signed into law on March 11, 2021.
Under the ARP, small and midsize employers may be eligible to claim tax credits to reimburse the costs of providing paid sick and family leave to employees due to COVID-19. This includes time taken by employees to receive or recover from COVID-19 vaccinations. Pursuant to a fact sheet recently released by the IRS, here are some of the key provisions for employers.
Intended to provide direct relief to small businesses, the ARP employer tax credit provides an excellent opportunity for employers to reduce their tax liability. Employers must be aware of the credits and properly claim them on Form 941. Employers should also provide the leave necessary for their employees to address COVID-19 concerns. While employers must be cautious against inquiring too directly into their employees’ medical matters, the employer should note whether the employee’s inability to work is related to a COVID-19 vaccination. The ARP credit encourages underlying policy goals of employers providing employees the time necessary to obtain (and recover) from multiple COVID vaccinations.