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American Rescue Plan Act Highlights

Posted on: April 29th, 2021 by Mary Serbekian

The American Rescue Plan Act (ARPA) was recently signed into law by President Biden. The legislation extends key tax credits available to small business for paid sick leave for employees related to Covid-19. It also expands the situations under which these credits can be claimed.

Background Law: 

The Families First Coronavirus Response Act of 2020 (FFCRA) provided for paid leave under the circumstances below, with a corresponding payroll tax credit available to make employers whole.

Sick Employee: Up to 2 weeks (80 hours) of paid sick leave at the employee’s regular rate of pay (up to $511 per day), if the employee is unable to work because of the government imposed quarantine, quarantine required by a healthcare provider, or because the employee was experiencing Covid related symptoms and seeking a diagnosis.

Sick Person (or Child) in Care of Employee: Up to 2 weeks (80 hours) paid sick leave at two thirds of the employee’s regular rate of pay (up to $200 per day) to employees unable to work because of the need to care for an individual subject to quarantine, the need to care for a child whose school or childcare was closed due to Covid-19, or to employees experiencing a substantially similar condition.

The paid leave requirements under the FFCRA were mandatory for many employers with 50 or more employees. The paid leave requirements and related credits above expired on March 31, 2021.

New Law: 

With respect to paid sick leave, the ARPA generally:

Extends the FFCRA paid sick leave (as voluntary) and the corresponding credits to September 30, 2021.

Expands the situations under which an employee is eligible for paid leave to include:

      • Seeking or waiting the results of Covid-19 test,
      • Obtaining a Covid-19 immunization vaccine, and
      • Unable to work due to symptoms from the Covid-19 immunization vaccine.

The ARPA also “recharges” paid leave eligibility as of April 1, 2021. An employee who exhausted their eligibility prior to April 1, 2021 would become re-eligible for an additional leave up to 2 weeks (80 hours).

At Brown CPA Group, we are closely monitoring all developing tax legislation and related guidance and interpretations. Please reach out to your Brown CPA Group professional team to discuss how we can assist your business needs.

Contributors: Barry Burchel, Tax Director; Victor Cortese, Senior Staff Accountant