In an effort to assist small and medium employers in claiming credits for voluntarily offering paid sick and family leave under the American Rescue Plan Act (ARPA), the Internal Revenue Service (IRS) drafted over 120 new FAQs to provide further clarity. While there were existing FAQs about tax credits for qualified leave wages paid for employees’ leave taken before April 1, 2021, under the Families First Coronavirus Response Act (FFCRA) and the Consolidated Appropriations Act of 2021, these new FAQs bridge the gap between the different legislations and answer additional concerns.

The new FAQs focus on the ARPA’s tax credits available to employers with fewer than 500 employees as well as certain government employers (without regard to the number of employees) for qualified sick and family leave wages paid voluntarily to employees through Sept. 30, 2021. Subjects range from general information, to defining an eligible employer, to claiming the credits and much more. Notably, there are four sections discussing how to calculate the amount of the tax credit for qualified sick leave wages and the tax credit for qualified family leave wages, as well as allocable qualified health plan expenses and allocable collectively bargained contributions.

DM Payroll Solutions is committed to helping you manage payroll when accounting for your employees’ paid sick leave and expanded family leave – contact us today to learn more.