David N. McCullough CPA PC

Financial, Tax, and Family Office Services

Effects of Families First Coronavirus Response Act (effective date 4/2/2020)

US Government-paid benefits: If you have COVID-19, or you’re quarantined, or caring for a COVID-19 person, or if you’re home because your child’s school or daycare center is closed – you’ll be eligible for benefits. Qualification is determined monthly – if you have 14 unpaid days from missing work in a month, you qualify. Days that your employer pays you for sick leave do not count. Payments will be two-thirds of your average monthly earnings (but capped at $4,000/month) and limited to 3 months. This program will be administered by the Social Security Administration, and online applications will be accepted once the SSA figures out how to administer it.

Employer-paid benefits: Your company is required to provide you with 14 days of paid sick leave effective immediately for use in a public health emergency. These days include days when your child’s school or your employer is closed due to a public health emergency.

Your company is also required to allow employees to gradually accrue 7 days of paid sick leave which are not subject to the COVID-19 immediate-availability rules. If you already have a sick-days policy allowing employees to accrue at least 7 days, this does not appear to change your policy – it appears to only force companies without a sick days policy to establish a policy with these minimum guidelines.

Documentation requirements are not defined. If you are diagnosed, retain the paperwork for proof. Keep a copy of the emails from your school indicating that in-school classes stopped on March XX, 2020, and resumed on (date).

Small businesses (50 or fewer employees) note: The cost of providing sick leave during a public health emergency can be recovered through a reduction in the employer’s portion of FICA tax. This requires additional information to be provided to your payroll department. You’ll need amounts paid, by employee, for absences starting 4/2/2020 until the public health emergency is declared over. The payroll tax forms will also have to be modified, and hopefully this revision will take place by the time the June 30th returns have to be filed. If you have already been accruing sick days, prepare a report as of April 1, 2020 that shows balance of days remaining by employee, as many systems track how many days are used, but do not allow you to partition the pre-April 2nd days.

The bill is not particularly well-written by tax professional standards. You can read the entirety of it here, but note that clarifications will probably be issued in the near future.

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