Frequently asked questions were an invaluable tool for employers that needed information about rapid-fire rulemaking and evolving guidance that shaped the federal pandemic response, government agency officials said March 15.
The online postings and virtual forums became an information thoroughfare for a remote workforce, the Labor Department, and the Internal Revenue Service to engage around Families First Coronavirus Response Act (FFCRA) provisions. Similar resources also may become the arteries for guidance for the America Rescue Plan Act of 2021 (H.R. 1319).
Major Undertaking
The Labor Department held its first virtual town hall seminar for employers two days after the FFCRA (Pub. L. 116-127) was enacted March 18, 2020, said Helen Applewhaite, director of the Labor Department’s Division of the Family and Medical Leave Act and Other Acts.
The agency was simultaneously moving from mainly on-site investigations and on-site work to nearly 100% staff teleworking, she said at the American Payroll Association’s online Capital Summit.
“From the date of enactment to the publication of the regulations was about two weeks to the day,” Applewhaite said. “That’s unprecedented. It normally takes months, if not years, to publish the full range of regulations under laws that get enacted.”
In that case, the agency just did not have that luxury, Applewhaite said. “Not only was it a time-limited legislation that came with an expiration date, it was also something that the public needed very rapidly” to ensure that employers knew how to apply the new provisions and that employees were aware of new protections, she said.
The regulations had to be written quickly for them to be of value, she said, noting that about 61 million employees were to be eligible for leave under FFCRA provisions.
The agency estimated that it responded to about 95% of the hundreds of thousands of phone calls that it received in the first weeks of the FFCRA’s implementation to ensure that answers were provided on how the law would apply.
Triage Techniques
Virtual presentations, frequently asked questions and Field Assistance Bulletins became vital conduits for the Labor Department to provide updated guidance, along with an extensive radio and television public service announcements conducted in English and Spanish.
From before regulations were issued throughout the period that the FFCRA was in effect, about 106 FAQs were published to the department’s website, Applewhaite said.
Field Assistance Bulletins advised agency offices how to apply certain provisions of the law, such as a June 26 bulletin that addressed whether closure of summer camps might qualify for FFCRA paid leave or leave under expanded Family and Medical Leave Act provisions, Applewhaite said. Updates to the frequently asked questions and bulletins with links to relevant regulations and affected laws were posted to the department’s website, she said.
The department’s website, which typically has about 500,000 visitors a week, recorded more than 6 million visits one week at the height of the FFCRA response and has surpassed 64 million views since the FFCRA was passed, Applewhaite said.
Many questions about FFCRA paid leave have focused on school closings or unavailable child-care providers or summer camp, Applewhaite said. Questions about situations related to different quarantine orders and state recommendations, including quarantining after travel, also were received she said.
Cross Referencing by Design
Sydney Gernstein, employment-tax branch chief with the IRS Office of Chief Counsel, said Labor Department FAQs were cross-referenced to strong acclaim. “We have cross referenced them a lot,” he said.
“We have to know what the (Labor Department) is saying to know what we’re saying so that’s been fantastic, but we have also been issuing numerous frequently asked questions,” Gernstein said, noting that the IRS may be up to three groups of FAQs.
The IRS, which Gerstein said was blindsided after Covid-19 changed the world seemingly overnight, had to implement changes on the fly, especially regarding the FFCRA. The FAQs were a major tool to provide the agency’s latest thinking and a quick responses to issues as they arose, he said.
The overlap between Labor Department and IRS guidance was by design, Gernstein said. The way that the employment tax credits worked was to provide an incentive for employers to provide Covid-19 paid leave by covering the cost of the leave. The employment tax credits piggybacked off the labor agency’s rules, he said.
Where leave was required under Labor Department rules, there was an equal tax credit, congruent and proportional, to that paid leave, Gernstein said.
The IRS communicated its interpretation of the FFCRA with regard to the tax credits through a variety of channels, from formal guidance, such as Internal Revenue Bulletins, forms, instructions, and publications, to forums such as calls with the payroll community, Gerstein said.
Tax Credits in 3 Stages
The tax credits, which have refundable and nonrefundable elements, “have come at us in two phases with potentially an imminent third stage,” Gernstein said.
The first stage, after the FFCRA was enacted, applied to weekly tax credits from April 1, 2020, to Dec. 31, 2020, he said.
The second phase, after Congress enacted the Covid-related tax relief act of 2020, modified and extended the tax credits through the first quarter of 2021, such that the tax credits would not expire until March 31, 2021, he said.
“It seems very possible, if not likely, that there will be a third round of legislation which will further extend the tax credits” perhaps for the second and third quarters of 2021, Gernstein said.
Employers generally may reduce employment tax deposits in anticipation of claiming the credits, Gernstein said, noting that IRS guidance provides relief from normal failure-to-deposit penalties. Employers that do not have sufficient employment tax deposits to cover the credits may claim them in advance, through the Form 7200 process, he said.
Tax-Related Changes Ahead
Several significant tax-related changes occurred under the American Rescue Plan of 2021, which was enacted March 11, Gernstein said.
A major change is that state and local governmental employers and related secondary agencies operating in the public interest can claim paid leave tax credits that previously were available only to the federal government and its agencies under the FFCRA. Under the prior law, no governmental players had to provide the leave, but they could not receive tax credits for doing so.
The new provisions apply prospectively with respect to wages paid for periods of leave in the second and third quarters of 2021, so from April 1 to Sept. 30, Gernstein said. They do not apply substantively to wages paid for periods through March 31, 2021, which are governed by previous rules.
Major changes also apply to paid sick leave and the paid family leave under the FFCRA, but with modifications, Gernstein said. The entitlements under FFCRA paid sick leave still apply under the American Rescue Plan Act, Gernstein said. The requirement to provide such leave no longer applies, but employers that provide the sick leave may claim the credit, he said.
Employers also can now claim the paid sick leave credit for periods when an employee is unable to work or telework because they are receiving testing for Covid-19 or they are absent when receiving a Covid-19 vaccination under the American Rescue Plan Act of 2021, in addition to claiming the credit for the same scenarios that paid sick leave could be taken under the FFCRA, Gernstein said. The same daily and aggregate paid sick leave credit limits of $200 or $511 a day apply, depending on the reason for leave, he said.
For paid sick leave, the tax credit amount was capped at $511 per employee per day if leave was for quarantining reasons and at $200 per employee per day if leave was to care for a quarantined person or for qualifying child-care reasons. For paid family leave, the tax credit amount also was 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 qualified family wages that may be counted toward the family leave tax credit rose to $12,000 from $10,000 per employee under the ARPA.
Those credit limits reset for purposes of the American Rescue Plan Act, he said. It is like getting a new $12,000, starting with the second quarter of 2021, he said. Nothing carries over from prior law and nothing credits against what you receive under the American Rescue Plan, he said.
The nonrefundable portion of the credits applies against the employer share of Medicare tax under the American Rescue Plan, rather than Social Security tax as was the case under the FFCRA, Gernstein said.
The leave wages that employers pay employees under the American Rescue Plan are subject to the employer share of Social Security and the employer share of Medicare tax, Gernstein said. But now, employers can claim a tax credit or can increase the credits by both so that they have to all FICA, but then they can get tax credits for both components of the FICA tax.
Another major change is that the credits are increasing not only for applicable qualified health plan expenses but also for certain benefits provided under collectively bargained agreements, including eligible defined benefit contributions and eligible apprenticeship program contributions, Gernstein said.
A nondiscrimination requirements also exists in the American Rescue Plan, “which makes sense if you think about it because now the leave is not mandatory,” allowing employers to pick and choose who leave is given to, Gernstein said. “There are provisions in the law that prevent the employer from providing (leave) in a way that discriminates against highly compensated employees,” he said.
A number of provisions in the American Rescue Plan also detail how the paid leave credits interact with other credits, including the Work Opportunity Credit and the employee retention credit, Gernstein said.