IRS Guidance on How to Report 2021 FFCRA Leave

Some employers voluntarily extended into 2021 emergency COVID leave as outlined in the Families First Coronavirus Response Act (FFCRA), and the tax credits related to providing that leave expire on September 30, 2021.  As a refresher, the FFCRA emergency leave tax credits fully reimbursed qualifying employers with fewer than 500 employees for wages related to the following:

• Emergency Paid Sick Leave (EPSL)
  • Reasons 1, 2, and 3 provided 100% pay to a $511 per day cap
    1. Quarantined or isolated subject to federal, state, or local order
    2. Advised by a health care provider to self-quarantine due to concerns related to COVID-19
    3. Experiencing symptoms of COVID-19 and seeking a medical diagnosis
       • This was expanded as of April 1, 2021, to also include individuals:
         • Exposed to COVID-19 and seeking a medical diagnosis but not yet exhibiting symptoms
         • Whose employer is requesting a test
         • Obtaining a COVID-19 vaccine and recovering from any side effects of the vaccine
  • Reasons 4 and 5 provided 2/3 pay to a $200 per day cap
    4. Caring for an individual doing #1 or #2
    5. Caring for a child whose school or place of care is closed due to COVID-19
  • As of April 1, 2021, reason 6 was also provided with 2/3 pay to a $200 per day cap
    6. This was a “catch-all” for when the employee is experiencing “any other substantially similar condition” but was not given a specific example to use until now, which is the employee “accompanying an individual to obtain the COVID-19 vaccine or caring for an individual who is recovering from conditions related to obtaining the COVID-19 vaccine”
• Emergency Family and Medical Leave (EFML)
  • Previously allow for reason #5 only (childcare/school unavailability due to COVID-19) for 2/3 pay to $200 per day after the first two weeks
  • Expanded as of April 1, 2021, to include all six EPSL reasons for covered leave and to now pay during the first 2 weeks
• Governmental employers were previously not eligible, but certain governmental employers became eligible for the tax credits as of April 1, 2021, even if they 500+ employees

On July 8, 2020, the IRS announced Notice 2020-54 explaining how to report FFCRA leave taken in 2020 for employers that claimed the tax credits on such leaves.  On September 7, 2021, the IRS announced Notice 2021-53 explaining how to report FFCRA leave taken in 2021 for employers that claimed the tax credits on such leaves.  Leave taken between January 1, 2021, and March 31, 2021, as extended by the Consolidated Appropriations Act (CAA) is to be reported separately from leave taken between April 1, 2021, and September 30, 2021, as extended by the American Rescue Plan Act (ARPA).  The notice gives specific reporting instructions for leave wages that must be entered on the Form W-2 and includes model language employers may provide as part of the Form W-2, Box 14 “Instructions for Employee,” or in a separate statement.

Essentially, the employer that claimed tax credits on voluntarily extended FFCRA emergency leave wages must not only report such wages in W-2 boxes 1, 3, and 5 as instructed, but must also separately report the following in Box 14 or in a separate statement, with a specific description of each type, related to compensation reimbursed via tax credit:

Type of Leave	Sample Description IRS Wants Employers to Use	Amount
EPSL taken between 1/1/21 and 3/31/21 for reasons 1, 2, and/or 3	“Sick leave wages subject to the $511 per day limit paid for leave taken after December 31, 2020, and before April 1, 2021”	$__
EPSL taken between 1/1/21 and 3/31/21 for reasons 4 and 5	“Sick leave wages subject to the $200 per day limit paid for leave taken after December 31, 2020, and before April 1, 2021″	$__
EFML taken between 1/1/21 and 3/31/21 (only available for reason #5)	“Emergency family leave wages paid for leave taken after December 31, 2020, and before April 1, 2021″	$__
EPSL taken between 4/1/21 and 9/30/21 for reasons 1, 2, and/or 3	“Sick leave wages subject to the $511 per day limit paid for leave taken after March 31, 2021, and before October 1, 2021″	$__
EPSL taken between 4/1/21 and 9/30/21 for reasons 4, 5, and/or 6	“Sick leave wages subject to the $200 per day limit paid for leave taken after March 31, 2021, and before October 1, 2021″	$__
EFML taken between 4/1/21 and 9/30/21 (for any of the 6 reasons)	“Emergency family leave wages paid for leave taken after March 31, 2021, and before October 1, 2021″	$__

 

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.