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Sick and Family Leave Credit/Tax Update

03/17/2021

On Thursday, President Biden signed into law the 628-page American Rescue Plan Act (ARPA).

While we’re still reading and analyzing the new law, one item that caught our immediate attention is that the tax credit for employee sick and family leave has been extended to September 30, 2021. Since the IRS recently ruled that employers who did not initially pay qualifying leave wages may do so in a later quarter (thus avoiding amended returns), this appears to extend the date employers may catch up with the credit to September 30. That is helpful. The mandate for employers to participate in this program ended on December 31, 2020, but now employers may choose to participate in this through September 30, 2021.

As we progress through tax season, we are rearranging our priorities on the fly to adapt to the new rules. In the last 75 days, we have had two major tax acts with over 6,200 pages to analyze. We’re also working with clients on the PPP second draw, and PPP forgiveness.  Our priorities over the next 45 days are:

1.    Absorb the new tax legislation to determine immediate impacts and actions to take.

2.    Help clients with the PPP second draw; applications are currently due March 31.

3.    Prepare your tax returns to get your refunds, or at least to get clarity on your tax situation.

4.    Processing PPP forgiveness applications.

Due to the additional burdens placed on us during an already busy time, we anticipate extending many of the tax returns we prepare. This will allow us the time necessary to ensure we get the greatest tax result for our clients. Thank you for your understanding during these difficult times.

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