The American Rescue Plan Act (ARPA), signed into law earlier this year, amended and extended the tax credits available to eligible employers that provide paid sick and family leave. This relief is consistent with the COVID-related leave originally provided under the Families First Coronavirus Response Act enacted in March of 2020.
Just last month, the IRS issued News Release 2021-128 containing information aimed at helping small to midsized employers claim the credits. Among the most pressing challenges faced by eligible employers is determining what information they should gather and retain to substantiate eligibility.
The IRS clarifies that, to substantiate eligibility for the paid sick leave or paid family leave credits, a qualifying employer must receive a written request for the leave from an employee that includes:
- The employee’s name,
- The date or dates for which leave is requested,
- A statement of the COVID-related reason the employee is requesting leave as well as written support for that reason, and
- A statement that the employee is unable to work, including by means of telework, for that reason.
In the case of a leave request based on a government quarantine or isolation order or self-quarantine advice, the statement from the employee should include the name of the governmental entity ordering quarantine or isolation, or the name of the health care professional advising self-quarantine. If the person subject to quarantine or isolation, or advised to self-quarantine, isn’t the employee, that person’s name and relation to the employee must be provided.
For a leave request based on a school closing or child care provider unavailability, the statement from the employee should include the name and age of the child (or children) to be cared for and the name of the school (or summer camp, summer enrichment program, or other summer program) that has closed or place of care that’s unavailable. A statement should also be included indicating that no other suitable person will be providing care for the child during the period for which the employee is receiving family medical leave.
If a leave request is submitted while an employee is awaiting the results of a COVID-19 test or diagnosis, because of either exposure or an employer request, the statement from the employee should include the date of the test. Should an employee request leave to recover from a condition related to vaccination, the statement from the employee should include the date of vaccination.
Care and diligence
Employers must exercise great care and diligence when substantiating their eligibility for the ARPA’s paid sick leave or paid family leave credits. Of course, there are other details to consider — many of which are also addressed in IRS News Release 2021-128. Cg Tax, Audit & Advisory can help you better understand and follow the rules. © 2021