The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided two new employer tax credits:
- Sick and Family Leave Credit
- Employee Retention Credit.
As a reminder, federal, state and local government entities, and any agencies or instrumentalities of those entities, are not entitled to either of these credits. However, tribal governments may be eligible to claim both the Sick and Family Leave Credit and the Employee Retention Credit. For more information on eligible employers, see:
- What is an Eligible Employer? (FFCRA – Sick & Family Leave Credits) – Questions 19b, 19c and 19g.
- Determining Which Employers are Eligible to Claim the Employee Retention Credit (CARES Act) – Questions 18, 19, 21 and 21a.The following information provides more details on the credits:
If a Form 941, Employer’s Quarterly Federal Tax Return, claiming either of these credits has been filed by or on behalf of a federal, state or local government entity, or any agency or instrumentality of a government entity, the claimed credits will be disallowed and result in a balance due tax liability.
The following information provides more details on the credits:
- IR‐2020‐62, IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19
- COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs
- FAQs: Employee Retention Credit under the CARES Act
Lisa Smith, SPHR, SHRM-SCP