Our friends at NAPEO have provided an Alert on the new IRS Offse of Paid Leave for employers.

IRS Announces Immediate Offset of Paid Leave and
Promises “Simple and Clear” Guidance on Exemptions
On March 20, 2020, the IRS issued news release IR-2020-57, available here, relating to its forthcoming guidance under the Families First Coronavirus Response Act (the Act). Specifically, the release states that qualified businesses may seek immediate reimbursement of paid FMLA and sick leave by offsetting those amounts from quarterly payroll tax payments. Generally, a business qualifies for the retentions if it has fewer than 500 employees and was required to pay FMLA or sick leave due to COVID-19. Additionally, the IRS will seek to provide expedited refunds in situations of overpayment, anticipating a two-week turnaround. Payroll taxes available for offset include federal income taxes and both the employer and employees’ shares of Social Security and Medicare taxes with respect to all employees.

The IRS additionally notes that the criteria for a small business to qualify to be exempt from the paid FMLA and sick leave requirements will be “simple and clear” and expects the Department of Labor to provide guidance and rulemaking on an emergency basis. The release also announces that the DOL will be instituting a temporary non-enforcement policy for employers in violation of the Act so long as they acted reasonably and in good faith in attempting to comply.

NAPEO will continue to monitor these events as they evolve.



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