Frequently asked questions have been an invaluable tool for employers who need information on setting rapid fire rules and evolving guidelines that will shape the response to the federal pandemic, government officials said on March 15.
The online postings and virtual forums became a source of information for a remote workforce, the Department of Labor, and the Internal Revenue Service to deal with the provisions of the Families First Coronavirus Response Act (FFCRA). Similar resources can also guide the America Rescue Plan Act of 2021 (HR 1319).
The Department of Labor held its first virtual town hall seminar for employers on March 18, 2020, two days after the FFCRA (Pub. L. 116-127) went into effect, said Helen Applewhaite, director of the Department of Labor’s Department of Family and Sick Leave and Other Acts.
The agency shifted from mostly on-site investigations and on-site work to almost 100% teleworking of employees at the same time, it said at the American Payroll Association’s online capital summit.
“It was about two weeks to the day from the effective date to the publication of the regulations,” Applewhaite said. “That is unprecedented. It usually takes months, if not years, for all regulations to be published in accordance with applicable law. “
In this case, the agency just didn’t have that luxury, Applewhaite said. “It was not just temporary legislation with an expiration date, but something the public needed very quickly” to ensure employers knew how to apply the new rules and that workers were aware of new safeguards are informed, she said.
The rules need to be written quickly to be of value, she said, noting that approximately 61 million workers should be entitled to vacation under the FFCRA rules.
The agency estimated that it answered approximately 95% of the hundreds of thousands of phone calls it received in the first few weeks of implementing the FFCRA to ensure that responses were given on the law’s application.
Virtual presentations, FAQs and field support bulletins became essential tools for the Department of Labor to provide updated guidance along with extensive public broadcasting announcements in English and Spanish.
Prior to the enactment of regulations throughout the period that the FFCRA was in place, around 106 FAQs were posted on the department’s website, according to Applewhaite.
The Field Assistance Bulletins advised authorities on how to apply certain provisions of the law, such as a June 26 bulletin regarding whether to close summer camps for a paid FFCRA vacation or a vacation under the expanded provisions of the Family and Medical Leave Act is eligible, Applewhaite said. Updates to FAQs and bulletins with links to relevant regulations and affected laws have been posted on the department’s website, she said.
The department’s website, which typically has around 500,000 weekly visitors, had more than 6 million visits a week at the height of the FFCRA response and has exceeded 64 million views since the FFCRA was passed, Applewhaite said.
Many questions about FFCRA paid vacations have centered on school closings or unavailable childcare facilities or summer camps, Applewhaite said. Questions about situations related to various quarantine orders and government recommendations, including post-travel quarantine, were also received, she said.
Cross-referencing by design
Sydney Gernstein, director of labor tax at the IRS Office of Chief Counsel, said the Department of Labor’s frequently asked questions had been widely recognized. “We referred to them a lot,” he said.
“We need to know what that is [Labor Department] says knowing what we’re saying was fantastic, but we also asked a lot of frequently asked questions, ”said Gernstein, noting that the IRS can have up to three sets of FAQs.
The IRS, which Gerstein said was blind after Covid-19 apparently changed the world overnight, had to make changes on the fly, particularly with regards to the FFCRA. The FAQs are an important tool in providing the agency’s latest insights and a quick response to problems that arise, he said.
The overlap between the Department of Labor and the IRS guidance is intentional, Gernstein said. The way that the employment tax credits worked should provide an incentive for employers to provide Covid-19 paid vacation by covering the cost of vacation. The tax credits for workers piggybacked by the rules of the employment office, he said.
Where vacation was required under Labor Department rules, there was an equal tax credit that was congruent and proportional to that vacation paid, Gernstein said.
The IRS shared its interpretation of the FFCRA regarding tax credits through a variety of channels, from formal guidelines like internal revenue bulletins, forms, instructions, and publications to forums like calling payroll, Gerstein said.
Tax credits in 3 levels
The tax credits, which contain refundable and non-refundable items, “have been received in two stages, with possibly a third stage imminent,” said Gernstein.
The first phase after the FFCRA went into effect was for weekly tax credits from April 1, 2020 through December 31, 2020, he said.
In the second phase, after Congress passed the 2020 Covid-related Tax Relief Act, the tax credits were amended and extended through the first quarter of 2021 so that the tax credits would not expire until March 31, 2021, he said.
“It seems very likely, if not likely, that there will be a third round of legislation that will further expand tax credits,” Gernstein said, perhaps for the second and third quarters of 2021.
Employers could generally reduce labor tax deposits to claim the credits, Gernstein said, noting that IRS guidelines exonerate normal penalties for non-depositing deposits. Employers who do not have sufficient payroll tax deposits to cover the credits can claim them upfront through the Form 7200 process, he said.
Tax changes in advance
Several significant tax changes have occurred as part of the US 2021 bailout plan, which went into effect on March 11, Gernstein said.
One major change is that state and local state employers and related secondary agencies working in the public interest can apply for paid vacation tax credits that were previously only available to the federal government and its agencies under the FFCRA. Under the previous law, no state actors had to grant leave, but could not receive tax credits for it.
The new provisions apply prospectively to wages paid for vacation periods in the second and third quarters of 2021, from April 1 to September 30, Gernstein said. In terms of content, they do not apply to wages that are paid for periods up to March 31, 2021 for which earlier rules apply.
Substantial changes also apply to paid sick leave and paid family leave under the FFCRA, but with changes, Gernstein said. FFCRA’s paid sick leave entitlements continue to apply under the American Rescue Plan Act, Gernstein said. The requirement to be granted such leave no longer applies, but employers who grant sick leave can apply for the credit, he said.
Employers can now also apply for the Paid Sickness Credit for periods when an employee cannot work or telework because they are receiving tests for Covid-19 or absent if they have a Covid-19 vaccination under the American Rescue Plan Act of 2021 receives. In addition to drawing the loan for the same scenarios where paid sick leave could be drawn under the FFCRA, Gernstein said. The same daily and total paid credit limits for sick leave of $ 200 or $ 511 per day apply depending on the reason for the vacation, he said.
The tax credit for paid sick leave was capped at $ 511 per employee per day if the vacation was quarantined and to $ 200 per employee per day if the vacation was for a quarantined person or qualified childcare. For family paid vacation, the tax credit has also been capped at $ 200 per employee per day, up to a maximum aggregate amount for all calendar quarters of $ 10,000 per employee under the FFCRA. The total amount of qualifying family wages that are eligible for family vacation tax credit increased from $ 10,000 per employee under the ARPA to $ 12,000.
Those credit limits have been reset for the purposes of the American Rescue Plan Act, he said. It’s like getting in a new $ 12,000 from the second quarter of 2021, he said. Nothing carries over from previous laws and nothing speaks up for what you’re getting under the American bailout, well, he said.
The non-refundable portion of the credits apply to the employer’s share of Medicare tax under the American Rescue Plan and not to social security tax as was the case under the FFCRA, Gernstein said.
The vacation wages that employers pay their workers under the American Rescue Plan are subject to employer’s share of social security and employer’s share of Medicare tax, Gernstein said. Now employers can apply for a tax credit or increase the tax credit by both so they get all FICA, but then they can get tax credits for both components of the FICA tax.
Another key change is that credits will increase not only for applicable expenses for qualified health insurance, but also for certain benefits under collective agreements, including eligible performance-based contributions and eligible contributions to the apprenticeship program, Gernstein said.
A non-discrimination requirement also exists in the American bailout plan, “which makes sense when you think about it because vacation isn’t mandatory now,” so employers can choose who gets the vacation, Gernstein said. “The law contains provisions that prevent employers from providing them [leave] in a way that discriminates against highly paid employees, ”he said.
A number of provisions in the American Rescue Plan also describe how Vacation Vacation Credits interact with other loans, including Work Opportunity Credit and Employee Retention Credit, Gernstein said.