On April 21, 2021, the Internal Revenue Service (IRS) and the Treasury Department released a new fact sheet that outlines additional details about tax credits available under the American Rescue Plan (ARP) to help eligible employers and how to claim the credit for leave paid to employees related to COVID-19 vaccinations.
The ARP tax credits are available to eligible employers that pay sick and family leave taken from April 1, 2021, through Sept. 30, 2021.
Eligible employers like tax-exempt businesses and organizations with fewer than 500 employees and certain governmental employers can receive a tax credit for providing paid time off for each employee receiving the vaccine and for any time needed to recover from the vaccine.
“This new information is a shot in the arm for struggling small employers who are working hard to keep their businesses going while also watching out for the health of their employees,” said IRS Commissioner Chuck Rettig. “Our work on this issue is part of a larger effort by the IRS to assist the nation recover from the pandemic.”
The paid leave credits under the ARP are tax credits against the employer’s share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer’s share of the Medicare tax.
To review the complete details of the fact sheet, FS-2021-09, April 2021, please click this link.