The Internal Revenue Service (“IRS”) recently provided an initial guidance document to assist businesses with the process of defraying the costs of paid sick leave required under the Families First Coronavirus Response Act (FFCRA). Of immediate importance to employers, the IRS provided some guidance regarding what information you should receive from an employee in order to substantiate eligibility for the FFCRA tax credits.
Documentation to Track the Credit Entitlements
In order to qualify for the federal tax credit for providing the emergency paid leave, qualifying employers will need to obtain from the employee a written request for the Emergency Paid Sick Leave or Emergency FMLA leave. In all leave situations, you should ensure you retain the following pieces of information to support the credit entitlement:
- Documentation to show how you determine the amount of qualified sick and family leave wages you paid to each employee, including records of work, telework, and qualified family leave;
- Documentation to show how you determine the amount of qualified health plan expenses that the employer allocated to wages (see FAQ 31 through 36on the IRS Guidance entitled “Determining the Amount of Allocable Qualified Health Plan Expenses” for methods to compute this allocation);
- Copies of any completed Forms 7200 Advance of Employer Credits Due to COVID-19 that you submit to the IRS; and
- Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that you submit to the IRS. If you use third-party payers to meet your employment tax obligations, you should retain the records of information you provide them regarding your entitlement to the credit claimed on Form 941.
Information to Request and Retain in Specific Leave Situations
Reason for Leave
Employee is experiencing COVID-19 symptoms and is seeking medical diagnosis.
Required Documentation
- Employee’s name;
- Date(s) the leave is requested;
- A statement of the COVID-19 related reason the employee is requesting leave and “written support” for such reason; and
- A statement that the employee is unable to work or telework due to a COVID-19 related reason, including the name of the health care professional they are seeking a medical diagnosis from (a note from the doctor is ok, but may not be practical).
Reason for Leave
Employee is caring for an individual subject to a federal, state, or local quarantine or isolation order, or has been advised by a health care provider to self-quarantine due to COVID-19 concerns.
Required Documentation
- Employee’s name;
- Name of the person subject to quarantine or advised to self-quarantine;
- Relation of the person subject to quarantine or advised to self-quarantine;
- Date(s) the leave is requested;
- A statement of the COVID-19 related reason the employee is requesting leave and “written support” for such reason;
- A statement that the employee is unable to work or telework due to a COVID-19 related reason; and
- The name of the government entity ordering the quarantine or the name of the health care professional advising self-quarantine, including requesting a copy of the quarantine order.
Reason for Leave
Employee is caring for their child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency.
Require Documentation
- Employee’s name;
- Name and age of the child/children;
- Name of the school that has closed or place of care that is unavailable;
- Date(s) the leave is requested;
- A statement of the COVID-19 related reason the employee is requesting leave and “written support” for such reason. The “written support” should include:
- A statement that the employee is unable to work or telework due to a COVID-19 related reason;
- Representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave; and
- If the child is older than 14 and needs care during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
Reason for Leave
Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Required Documentation
- Employee’s name;
- Date(s) the leave is requested;
- A statement of the COVID-19 related reason the employee is requesting leave and “written support” for such reason; and
- A statement that the employee is unable to work or telework due to a COVID-19 related reason.
Maintenance of Leave Records
Employers should maintain all records noted above for at least four (4) years after the date the tax becomes due or is paid, whichever is later.