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Sec. 45S. Employer Credit For Paid Family And Medical Leave

I.R.C. § 45S(a) Establishment Of Credit
I.R.C. § 45S(a)(1) In General
For purposes of section 38, in the case of an eligible employer, the paid family and medical leave credit is an amount equal to the applicable percentage of the amount of wages paid to qualifying employees during any period in which such employees are on family and medical leave.
I.R.C. § 45S(a)(2) Applicable Percentage
For purposes of paragraph (1), the term “applicable percentage” means 12.5 percent increased (but not above 25 per-cent) by 0.25 percentage points for each percentage point by which the rate of payment (as described under subsection (c)(1)(B)) exceeds 50 percent.
I.R.C. § 45S(b) Limitation
I.R.C. § 45S(b)(1) In General
The credit allowed under subsection (a) with respect to any employee for any taxable year shall not exceed an amount equal to the product of the normal hourly wage rate of such employee for each hour (or fraction thereof) of actual services performed for the employer and the number of hours (or fraction thereof) for which family and medical leave is taken.
I.R.C. § 45S(b)(2) Non-Hourly Wage Rate
For purposes of paragraph (1), in the case of any employee who is not paid on an hourly wage rate, the wages of such employee shall be prorated to an hourly wage rate under regulations established by the Secretary.
I.R.C. § 45S(b)(3) Maximum Amount Of Leave Subject To Credit
The amount of family and medical leave that may be taken into account with respect to any employee under subsection (a) for any taxable year shall not exceed 12 weeks.
I.R.C. § 45S(c) Eligible Employer
For purposes of this section—
I.R.C. § 45S(c)(1) In General
The term “eligible employer” means any employer who has in place a written policy that meets the following requirements:
I.R.C. § 45S(c)(1)(A)
The policy provides—
I.R.C. § 45S(c)(1)(A)(i)
in the case of a qualifying employee who is not a part-time employee (as defined in section 4980E(d)(4)(B)), not less than 2 weeks of annual paid family and medical leave, and
I.R.C. § 45S(c)(1)(A)(ii)
in the case of a qualifying employee who is a part-time employee, an amount of annual paid family and medical leave that is not less than an amount which bears the same ratio to the amount of annual paid family and medical leave that is provided to a qualifying employee described in clause (i) as—
I.R.C. § 45S(c)(1)(A)(ii)(I)
the number of hours the employee is expected to work during any week, bears to
I.R.C. § 45S(c)(1)(A)(ii)(II)
the number of hours an equivalent qualifying employee described in clause (i) is expected to work during the week.
I.R.C. § 45S(c)(1)(B)
The policy requires that the rate of payment under the program is not less than 50 percent of the wages normally paid to such employee for services performed for the employer.
I.R.C. § 45S(c)(2) Special Rule For Certain Employers
I.R.C. § 45S(c)(2)(A) In General
An added employer shall not be treated as an eligible employer unless such employer provides paid family and medical leave in compliance with a written policy which ensures that the employer—
I.R.C. § 45S(c)(2)(A)(i)
will not interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under the policy, and
I.R.C. § 45S(c)(2)(A)(ii)
will not discharge or in any other manner discriminate against any individual for opposing any practice prohibited by the policy.
I.R.C. § 45S(c)(2)(B) Added Employer; Added Employee
For purposes of this paragraph—
I.R.C. § 45S(c)(2)(B)(i) Added Employee
The term “added employee” means a qualifying employee who is not covered by title I of the Family and Medical Leave Act of 1993, as amended.
I.R.C. § 45S(c)(2)(B)(ii) Added Employer
The term “added employer” means an eligible employer (determined without regard to this paragraph), whether or not covered by that title I, who offers paid family and medical leave to added employees.
I.R.C. § 45S(c)(3) Aggregation Rule
All persons which are treated as a single employer under subsections (a) and (b) of section 52 shall be treated as a single taxpayer.
I.R.C. § 45S(c)(4) Treatment Of Benefits Mandated Or Paid For By State Or Local Governments
For purposes of this section, any leave which is paid by a State or local government or required by State or local law shall not be taken into account in determining the amount of paid family and medical leave provided by the employer.
I.R.C. § 45S(c)(5) No Inference
Nothing in this subsection shall be construed as subjecting an employer to any penalty, liability, or other consequence (other than ineligibility for the credit allowed by reason of subsection (a) or recapturing the benefit of such credit) for failure to comply with the requirements of this subsection.
I.R.C. § 45S(d) Qualifying Employees
For purposes of this section, the term “qualifying employee” means any employee (as defined in section 3(e) of the Fair Labor Standards Act of 1938, as amended) who—
I.R.C. § 45S(d)(1)
has been employed by the employer for 1 year or more, and
I.R.C. § 45S(d)(2)
for the preceding year, had compensation not in excess of an amount equal to 60 percent of the amount applicable for such year under clause (i) of section 414(q)(1)(B).
I.R.C. § 45S(e) Family And Medical Leave
I.R.C. § 45S(e)(1) In General
Except as provided in paragraph (2), for purposes of this section, the term “family and medical leave” means leave for any 1 or more of the purposes described under subparagraph (A), (B), (C), (D), or (E) of paragraph (1), or paragraph (3), of section 102(a) of the Family and Medical Leave Act of 1993, as amended, whether the leave is provided under that Act or by a policy of the employer.
I.R.C. § 45S(e)(2) Exclusion
If an employer provides paid leave as vacation leave, personal leave, or medical or sick leave (other than leave specifically for 1 or more of the purposes referred to in paragraph (1)), that paid leave shall not be considered to be family and medical leave under paragraph (1).
I.R.C. § 45S(e)(3) Definitions
In this subsection, the terms “vacation leave”, “personal leave”, and “medical or sick leave” mean those 3 types of leave, within the meaning of section 102(d)(2) of that Act.
I.R.C. § 45S(f) Determinations Made By Secretary Of Treasury
For purposes of this section, any determination as to whether an employer or an employee satisfies the applicable requirements for an eligible employer (as described in subsection (c)) or qualifying employee (as described in subsection (d)), respectively, shall be made by the Secretary based on such information, to be provided by the employer, as the Secretary determines to be necessary or appropriate.
I.R.C. § 45S(g) Wages
For purposes of this section, the term “wages” has the meaning given such term by subsection (b) of section 3306 (determined without regard to any dollar limitation contained in such section). Such term shall not include any amount taken into account for purposes of determining any other credit allowed under this subpart.
I.R.C. § 45S(h) Election To Have Credit Not Apply
I.R.C. § 45S(h)(1) In General
A taxpayer may elect to have this section not apply for any taxable year.
I.R.C. § 45S(h)(2) Other Rules
Rules similar to the rules of paragraphs (2) and (3) of section 51(j) shall apply for purposes of this subsection.
I.R.C. § 45S(i) Termination
This section shall not apply to wages paid in taxable years beginning after December 31, 2025.
(Added by Pub. L. 115-97, title I, Sec. 13403(a)(1), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 116-94, Div. Q, title I, Sec. 142(a), Dec. 20, 2019; Pub. L. 116-260, Div. EE, title I, Sec. 119(a), Dec. 27, 2020, 134 Stat. 1182.)
BACKGROUND NOTES
AMENDMENTS
2020 -- Subsec. (i). Pub. L. 116-260, Div. EE, Sec. 119(a), amended subsec. (i) by substituting “December 31, 2025” for “December 31, 2020”.
2019 -- Subsec. (i). Pub. L. 116-94, Sec. 142(a), amended subsec. (i) by substituting “December 31, 2020” for “December 31, 2017”.
EFFECTIVE DATE OF 2020 AMENDMENT
Amendment by Pub. L. 116-260, Div. EE, Sec. 119(a), effective for wages paid in tax years beginning after December 31, 2020.
EFFECTIVE DATE OF 2019 AMENDMENT
Amendment by Pub. L. 116-94, Sec. 142(a), effective for wages paid in taxable years beginning after December 31, 2019.
EFFECTIVE DATE
Effective for wages paid in taxable years beginning after December 31, 2017.
EMPLOYEE RETENTION CREDIT FOR EMPLOYERS SUBJECT TO CLOSURE DUE TO COVID-19
Sec. 2301 of Pub. L. 116-136, as amended by Pub. L. 116-260, Div. EE, Secs. 206, 207, and 303(d)(3)(C)(iii), provided:
“SEC. 2301. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS SUBJECT TO CLOSURE DUE TO COVID-19.
“(a) IN GENERAL.—In the case of an eligible employer, there shall be allowed as a credit against applicable employment taxes for each calendar quarter an amount equal to 70 percent of the qualified wages with respect to each employee of such employer for such calendar quarter.
“(b) LIMITATIONS AND REFUNDABILITY.—
“(1) WAGES TAKEN INTO ACCOUNT.—The amount of qualified wages with respect to any employee which may be taken into account under subsection (a) by the eligible employer for any calendar quarter shall not exceed $10,000.
“(2) CREDIT LIMITED TO EMPLOYMENT TAXES.—The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable employment taxes (reduced by any credits allowed under subsections (e) and (f) of section 3111 of the Internal Revenue Code of 1986, sections 7001 and 7003 of the Families First Coronavirus Response Act, and section 303(d) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020) on the wages paid with respect to the employment of all the employees of the eligible employer for such calendar quarter.
“(3) REFUNDABILITY OF EXCESS CREDIT.—
“(A) IN GENERAL.—If the amount of the credit under subsection (a) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of the Internal Revenue Code of 1986.
“(B) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United States Code, any amounts due to the employer under this paragraph shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.
“(c) DEFINITIONS.—For purposes of this section—
“(1) APPLICABLE EMPLOYMENT TAXES.—The term ‘‘applicable employment taxes’’ means the following:
“(A) The taxes imposed under section 3111(a) of the Internal Revenue Code of 1986.
“(B) So much of the taxes imposed under section 3221(a) of such Code as are attributable to the rate in effect under section 3111(a) of such Code.
“(2) ELIGIBLE EMPLOYER.—
(A) IN GENERAL.—The term ‘‘eligible employer’’ means any employer—
“(i) which was carrying on a trade or business during the calendar quarter for which the credit is determined under subsection (a), and
“(ii) with respect to any calendar quarter, for which—
“(I) the operation of the trade or business described in clause (i) is fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease 2019 (COVID-19), or
“(II) the gross receipts (within the meaning of section 448(c) of the Internal Revenue Codeof 1986) of such employer for such calendar quarter are less than 80 percent of the gross receipts of such employer for the same calendar quarter in calendar year 2019.
“With respect to any employer for any calendar quarter, if such employer was not in existence as of the beginning of the same calendar quarter in calendar year 2019, clause (ii)(II) shall be applied by substituting ‘2020’ for ‘2019’.
“(B) ELECTION TO USE ALTERNATIVE QUARTER.—At the election of the employer—
“(i) subparagraph (A)(ii)(II) shall be 18 applied—
‘‘(I) by substituting ‘for the immediately preceding calendar quarter’ for ‘for such calendar quarter’, and
“(II) by substituting ‘the corresponding calendar quarter in calendar year 2019’ for ‘the same calendar quarter in calendar year 2019’, and
“(ii) the last sentence of subparagraph (A) shall be applied by substituting ‘the corresponding calendar quarter in calendar year 2019’ for ‘the same calendar quarter in calendar year 2019’.
“An election under this subparagraph shall be made at such time and in such manner as the Secretary shall prescribe.
“(C) TAX-EXEMPT ORGANIZATIONS.—In the case of an organization which is described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code—
“(i) clauses (i) and (ii)(I) of subparagraph (A) shall apply to all operations of such organization, and
“(ii) any reference in this section to gross receipts shall be treated as a reference to gross receipts within the meaning of section 6033 of such Code.
“(3) QUALIFIED WAGES.—
“(A) IN GENERAL.—The term ‘‘qualified wages’’ means—
“(i) in the case of an eligible employer for which the average number of full-time employees (within the meaning of section 4980H of the Internal Revenue Code of 1986) employed by such eligible employer during 2019 was greater than 500, wages paid by such eligible employer with respect to which an employee is not providing services due to circumstances described in subclause (I) or (II) of paragraph (2)(A)(ii), or
“(ii) in the case of an eligible employer for which the average number of full-time employees (within the meaning of section 4980H of the Internal Revenue Code of 1986) employed by such eligible employer during 2019 was not greater than 500—
“(I) with respect to an eligible employer described in subclause (I) of paragraph (2)(A)(ii), wages paid by such eligible employer with respect to an employee during any period described in such clause, or
“(II) with respect to an eligible employer described in subclause (II) of such paragraph, wages paid by such eligible employer with respect to an employee during such quarter.
“(B) EXCEPTION.—The term ‘qualified wages’ shall not include any wages taken into account under section 7001 or section 7003 of the Families First Coronavirus Response Act.
“(4) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Treasury or the Secretary's delegate.
“(5) WAGES.—
“(A) IN GENERAL.—The term ‘‘wages’’ means wages (as defined in section 3121(a) of the Internal Revenue Code of 1986) and compensation (as defined in section 3231(e) of such Code). For purposes of the preceding sentence, in the case of any organization or entity described in subsection (f)(2), wages as defined in section 3121(a) of the Internal Revenue Code of 1986 shall be determined without regard to paragraphs (5), (6), (7), (10), and (13) of section 3121(b) of such Code (except with respect to services performed in a penal institution by an inmate thereof).
“(B) ALLOWANCE FOR CERTAIN HEALTH PLAN EXPENSES.—
“(i) IN GENERAL.—Such term shall include amounts paid by the eligible employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Internal Revenue Code of 1986), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a) of such Code.
‘‘(ii) ALLOCATION RULES.—For purposes of this section, amounts treated as wages under clause (i) shall be treated as paid with respect to any employee (and with respect to any period) to the extent that such amounts are properly allocable to such employee (and to such period) in such manner as the Secretary may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among periods of coverage.
“(6) OTHER TERMS.—Any term used in this section which is also used in chapter 21 or 22 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such chapter.
“(d) AGGREGATION RULE.—All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986, or subsection (m) or (o) of section 414 of such Code, shall be treated as one employer for purposes of this section.
“(e) CERTAIN RULES TO APPLY.—For purposes of this section, rules similar to the rules of sections 51(i)(1) and280C(a) of the Internal Revenue Code of 1986 shall apply.
“(f) CERTAIN GOVERNMENTAL EMPLOYERS.—
“(1) IN GENERAL.—This credit shall not apply to the Government of the United States, the government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.
‘‘(2) EXCEPTION.—Paragraph (1) shall not apply to—
‘‘(A) any organization described in section 501(c)(1) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, or
‘‘(B) any entity described in paragraph (1) if —
‘‘(i) such entity is a college or university, or
‘‘(ii) the principal purpose or function of such entity is providing medical or hospital care.
“In the case of any entity described in subparagraph (B), such entity shall be treated as satisfying the requirements of subsection (c)(2)(A)(i).
“(g) ELECTION TO NOT TAKE CERTAIN WAGES INTO ACCOUNT.—
‘‘(1) IN GENERAL.—This section shall not apply to so much of the qualified wages paid by an eligible employer as such employer elects (at such time and in such manner as the Secretary may prescribe) to not take into account for purposes of this section.
‘‘(2) COORDINATION WITH PAYCHECK PROTECTION PROGRAM.—The Secretary, in consultation with the Administrator of the Small Business Administration, shall issue guidance providing that payroll costs paid during the covered period shall not fail to be treated as qualified wages under this section by reason of an election under paragraph (1) to the extent that a covered loan of the eligible employer is not forgiven by reason of a decision under section 7A(g) of the Small Business Act or the application of section 7(a)(37)(J) of the Small Business Act. Terms used in the preceding sentence which are also used in section 7A(g) or 7(a)(37)(J) of the Small Business Act shall, when applied in connection with either such section, have the same meaning as when used in such section, respectively. Terms used in the preceding sentence which are also used in section 7A of the Small Business Act shall have the same meaning as when used in such section.
“(h) SPECIAL RULES.—
“(1) DENIAL OF DOUBLE BENEFIT.—Any wages taken into account in determining the credit allowed under this section shall not be taken into account as wages for purposes of sections 41, 45A, 45P, 45S, 51, and 1396 of the Internal Revenue Code of 1986.
“(2) THIRD PARTY PAYORS.—Any credit allowed under this section shall be treated as a credit described in section 3511(d)(2) of such Code.
“(i) TRANSFERS TO FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND.—There are hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 14 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of this section (without regard to this subsection). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund or Account had this section not been enacted.
‘‘(j) ADVANCE PAYMENTS.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2), no advance payment of the credit under subsection (a) shall be allowed.
‘‘(2) ADVANCE PAYMENTS TO SMALL EMPLOYERS.—
‘‘(A) IN GENERAL.—Under rules provided by the Secretary, an eligible employer for which the average number of full-time employees (within the meaning of section 4980H of the Internal Revenue Code of 1986) employed by such eligible employer during 2019 was not greater than 500 may elect for any calendar quarter to receive an advance payment of the credit under subsection (a) for such quarter in an amount not to exceed 70 percent of the average quarterly wages paid by the employer in calendar year 2019.
‘‘(B) SPECIAL RULE FOR SEASONAL EMPLOYERS.—In the case of any employer who employs seasonal workers (as defined in section 45R(d)(5)(B) of the Internal Revenue Code of 1986), the employer may elect to substitute ‘the wages for the calendar quarter in 2019 which corresponds to the calendar quarter to which the election relates’ for ‘the average quarterly wages paid by the employer in calendar year 2019’.
‘‘(C) SPECIAL RULE FOR EMPLOYERS NOT IN EXISTENCE IN 2019.—In the case of any employer that was not in existence in 2019, subparagraphs (A) and (B) shall each be applied by substituting ‘2020’ for ‘2019’ each place it appears.
“(3) RECONCILIATION OF CREDIT WITH ADVANCE PAYMENTS.—
‘‘(A) IN GENERAL.—The amount of credit which would (but for this subsection) be allowed under this section shall be reduced (but not below zero) by the aggregate payment allowed to the taxpayer under paragraph (2). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1) of the Internal Revenue Code of 1986.
‘‘(B) EXCESS ADVANCE PAYMENTS.—If the advance payments to a taxpayer under paragraph (2) for a calendar quarter exceed the credit allowed by this section (determined without regard to subparagraph (A)), the tax imposed by chapter 21 or 22 of the Internal Revenue Code of 1986 (whichever is applicable) for the calendar quarter shall be increased by the amount of such excess.
“(k) TREATMENT OF DEPOSITS.—The Secretary shall waive any penalty under section 6656 of the Internal Revenue Code of 1986 for any failure to make a deposit of any applicable employment taxes if the Secretary determines that such failure was due to the reasonable anticipation of the credit allowed under this section.
“(l) REGULATIONS AND GUIDANCE.—The Secretary shall issue such forms, instructions, regulations, and guidance as are necessary—
“(1) to allow the advance payment of the credit under subsection (a) as provided in subsection (j)(2), subject to the limitations provided in this section, based on such information as the Secretary shall require,
“(2) with respect to the application of the credit under subsection (a) to third party payors (including professional employer organizations, certified professional employer organizations, or agents under section 3504 of the Internal Revenue Code of 1986), including regulations or guidance allowing such payors to submit documentation necessary to substantiate the eligible employer status of employers that use such payors, and
‘‘(3) to prevent the avoidance of the purposes of the limitations under this section, including through the leaseback of employees.
‘‘Any forms, instructions, regulations, or guidance described in paragraph (2) shall require the customer to be responsible for the accounting of the credit and for any liability for improperly claimed credits and shall require the certified professional employer organization or other third party payor to accurately report such tax credits based on the information provided by the customer.
“(m) APPLICATION.—This section shall only apply to wages paid after March 12, 2020, and before July 1, 2021.
‘‘(n) PUBLIC AWARENESS CAMPAIGN.—
‘‘(1) IN GENERAL.—The Secretary shall conduct a public awareness campaign, in coordination with the Administrator of the Small Business Administration, to provide information regarding the availability of the credit allowed under this section.
‘‘(2) OUTREACH.—Under the campaign conducted under paragraph (1), the Secretary shall—
‘‘(A) provide to all employers which reported not more than 500 employees on the most recently filed return of applicable employment taxes a notice about the credit allowed under this section and the requirements for eligibility to claim the credit, and
‘‘(B) not later than 30 days after the date of the enactment of this subsection, provide to all employers educational materials relating to the credit allowed under this section, including specific materials for businesses with not more than 500 employees.’’
In amending Pub. L. 116-136, Sec. 2301, Pub. L. 116-260, Div. EE, Sec. 206, provided the following:
“(e) EFFECTIVE DATE.—
“(1) IN GENERAL.—The amendments made by this section shall take effect as if included in the provisions of the CARES Act to which they relate.
“(2) SPECIAL RULE.—
“(A) IN GENERAL.—For purposes of section 2301 of the CARES Act, an employer who has filed a return of tax with respect to applicable employment taxes (as defined in section 2301(c)(1) of division A of such Act) before the date of the enactment of this Act may elect (in such manner as the Secretary of the Treasury (or the Secretary's delegate) shall prescribe) to treat any applicable amount as an amount paid in the calendar quarter which includes the date of the enactment of this Act.
“(B) APPLICABLE AMOUNT.—For purposes of subparagraph (A), the term ‘‘applicable amount’’ means the amount of wages which—
“(i) are—
“(I) described in section 2301(c)(5)(B) of the CARES Act, as added by the amendments made by subsection (b), or
“(II) permitted to be treated as qualified wages under guidance issued pursuant to section 2301(g)(2) of the CARES Act (as added by subsection (c)), and
“(ii) were—
“(I) paid in a calendar quarter beginning after December 31, 2019, and before October 1, 2020, and
“(II) not taken into account by the taxpayer in calculating the credit allowed under section 2301(a) of division A of such Act for such calendar quarter.”
In amending Pub. L. 116-136, Sec. 2301, Pub. L. 116-260, Div. EE, Sec. 207(k), provided the following:
“(k) EFFECTIVE DATE.—The amendments made by this section shall apply to calendar quarters beginning after December 31, 2020.”
PAYROLL CREDIT FOR REQUIRED PAID SICK LEAVE
Sec. 7001 of Pub. L. 116-127, as amended by Pub. L. 116-260, Div. N, Sec. 286 and Pub. L. 116-260, Div. EE, Sec. 303(d)(3)(C)(i), provided that:
“SEC. 7001. PAYROLL CREDIT FOR REQUIRED PAID SICK LEAVE.
“(a) IN GENERAL.—In the case of an employer, there shall be allowed as a credit against the tax imposed by section 3111(a) or 3221(a) of the Internal Revenue Code of 1986 for each calendar quarter an amount equal to 100 percent of the qualified sick leave wages paid by such employer with respect to such calendar quarter.
“(b) LIMITATIONS AND REFUNDABILITY.—
“(1) WAGES TAKEN INTO ACCOUNT.—The amount of qualified sick leave wages taken into account under subsection (a) with respect to any individual shall not exceed $200 ($511 in the case of any day any portion of which is paid sick time described in paragraph (1), (2), or (3) of section 5102(a) of the Emergency Paid Sick Leave Act) for any day (or portion thereof) for which the individual is paid qualified sick leave wages.
“(2) OVERALL LIMITATION ON NUMBER OF DAYS TAKEN INTO ACCOUNT.—The aggregate number of days taken into account under paragraph (1) for any calendar quarter shall not exceed the excess (if any) of—
“(A) 10, over
“(B) the aggregate number of days so taken into account for all preceding calendar quarters.
“(3) CREDIT LIMITED TO CERTAIN EMPLOYMENT TAXES.—The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the tax imposed by section 3111(a) or 3221(a) of such Code for such calendar quarter (reduced by any credits allowed under subsections (e) and (f) of section 3111 of such Code, and section 303(d) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, for such quarter) on the wages paid with respect to the employment of all employees of the employer.
“(4) REFUNDABILITY OF EXCESS CREDIT.—
“(A) IN GENERAL.—If the amount of the credit under subsection (a) exceeds the limitation of paragraph (3) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of such Code.
“(B) TREATMENT OF PAYMENTS.—For purposes of section 1324 of title 31, United States Code, any amounts due to an employer under this paragraph shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.
“(c) QUALIFIED SICK LEAVE WAGES.—For purposes of this section, the term ‘‘qualified sick leave wages’’ means wages (as defined in section 3121(a) of the Internal Revenue Code of 1986) and compensation (as defined in section 3231(e) of the Internal Revenue Code) paid by an employer—
“(1) which are required to be paid by reason of the Emergency Paid Sick Leave Act, or
“(2) both—
“(A) which would be so required to be paid if such Act were applied—
“(i) by substituting ‘March 31, 2021’ for ‘December 31, 2020’ in section 5109 thereof, and
“(ii) without regard to section 5102(b)(3) thereof, and
“(B) with respect to which all requirements of such Act (other than subsections (a) and (b) of section 5105 thereof, and determined by substituting ‘To be compliant with section 5102, an employer may not’ for ‘It shall be unlawful for any employer to’ in section 5104 thereof) which would apply if so required are satisfied.”
“(d) ALLOWANCE OF CREDIT FOR CERTAIN HEALTH PLAN EXPENSES.—
“(1) IN GENERAL.—The amount of the credit allowed under subsection (a) shall be increased by so much of the employer's qualified health plan expenses as are properly allocable to the qualified sick leave wages for which such credit is so allowed.
“(2) QUALIFIED HEALTH PLAN EXPENSES.—For purposes of this subsection, the term ‘‘qualified health plan expenses’’ means amounts paid or incurred by the employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Internal Revenue Code of 1986), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a) of such Code.
“(3) ALLOCATION RULES.—For purposes of this section, qualified health plan expenses shall be allocated to qualified sick leave wages in such manner as the Secretary of the Treasury (or the Secretary's delegate) may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among covered employees and pro rata on the basis of periods of coverage (relative to the time periods of leave to which such wages relate).
“(e) SPECIAL RULES.—
“(1) DENIAL OF DOUBLE BENEFIT.—For purposes of chapter 1 of such Code, the gross income of the employer, for the taxable year which includes the last day of any calendar quarter with respect to which a credit is allowed under this section, shall be increased by the amount of such credit. Any wages taken into account in determining the credit allowed under this section shall not be taken into account for purposes of determining the credit allowed under section 45S of such Code.
“(2) ELECTION NOT TO HAVE SECTION APPLY.—This section shall not apply with respect to any employer for any calendar quarter if such employer elects (at such time and in such manner as the Secretary of the Treasury (or the Secretary's delegate) may prescribe) not to have this section apply.
“(3) CERTAIN TERMS.—Any term used in this section which is also used in chapter 21 of such Code shall have the same meaning as when used in such chapter.
“(4) CERTAIN GOVERNMENTAL EMPLOYERS.—This credit shall not apply to the Government of the United States, the government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.
“(f) REGULATIONS.—The Secretary of the Treasury (or the Secretary's delegate) shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including—
“(1) regulations or other guidance to prevent the avoidance of the purposes of the limitations under this section,
“(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section,
“(3) regulations or other guidance providing for waiver of penalties for failure to deposit amounts in anticipation of the allowance of the credit allowed under this section,
“(4) regulations or other guidance for recapturing the benefit of credits determined under this section in cases where there is a subsequent adjustment to the credit determined under subsection (a), and
“(5) regulations or other guidance to ensure that the wages taken into account under this section conform with the paid sick time required to be provided under the Emergency Paid Sick Leave Act.
“(g) APPLICATION OF SECTION.—This section shall apply only to wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury (or the Secretary's delegate) which is during the 15-day period beginning on the date of the enactment of this Act, and ending on March 31, 2021.
“(h) TRANSFERS TO FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND.—There are hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of this section (without regard to this subsection). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund or Account had this section not been enacted.”
PAYROLL CREDIT FOR REQUIRED PAID FAMILY LEAVE
Section 7003 of Pub. L. 116-127, as amended by Pub. L. 116-260, Div. N, Sec. 286, provided that:
“SEC. 7003. PAYROLL CREDIT FOR REQUIRED PAID FAMILY LEAVE.
“(a) IN GENERAL.—In the case of an employer, there shall be allowed as a credit against the tax imposed by section 3111(a) or 3221(a) of the Internal Revenue Code of 1986 for each calendar quarter an amount equal to 100 percent of the qualified family leave wages paid by such employer with respect to such calendar quarter.
“(b) LIMITATIONS AND REFUNDABILITY.—
“(1) WAGES TAKEN INTO ACCOUNT.—The amount of qualified family leave wages taken into account under subsection (a) with respect to any individual shall not exceed—
“(A) for any day (or portion thereof) for which the individual is paid qualified family leave wages, $200, and
“(B) in the aggregate with respect to all calendar quarters, $10,000.
“(2) CREDIT LIMITED TO CERTAIN EMPLOYMENT TAXES.—The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the tax imposed by section 3111(a) or 3221(a) of such Code for such calendar quarter (reduced by any credits allowed under subsections (e) and (f) of section 3111 of such Code, and section 7001 of this Act, for such quarter) on the wages paid with respect to the employment of all employees of the employer.
“(3) REFUNDABILITY OF EXCESS CREDIT.—If the amount of the credit under subsection (a) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of such Code.
“(c) QUALIFIED FAMILY LEAVE WAGES.—For purposes of this section, the term ‘‘qualified family leave wages’’ means wages (as defined in section 3121(a) of such Code) and compensation (as defined in section 3231(e) of the Internal Revenue Code) paid by an employer—
“(1) which are required to be paid by reason of the Emergency Family and Medical Leave Expansion Act (including the amendments made by such Act), or
“(2) both—
“(A) which would be so required to be paid if section 102(a)(1)(F) of the Family and Medical Leave Act of 1993, as amended by the Emergency Family and Medical Leave Expansion Act, were applied by substituting ‘March 31, 2021’ for ‘December 31, 2020’, and
“(B) with respect to which all requirements of the Family and Medical Leave Act of 1993 (other than section 107 thereof, and determined by substituting ‘To be compliant with section 102(a)(1)(F), an employer may not’ for ‘It shall be unlawful for any employer to’ each place it appears in subsection (a) of section 105 thereof, by substituting ‘made unlawful in this title or described in this section’ for ‘made unlawful by this title’ in paragraph (2) of such subsection, and by substituting ‘To be compliant with section 102(a)(1)(F), an employer may not’ for ‘It shall be unlawful for any person to’ in subsection (b) of such section) which relate to such section 102(a)(1)(F), and which would apply if so required, are satisfied.”
“(d) ALLOWANCE OF CREDIT FOR CERTAIN HEALTH PLAN EXPENSES.—
“(1) IN GENERAL.—The amount of the credit allowed under subsection (a) shall be increased by so much of the employer's qualified health plan expenses as are properly allocable to the qualified family leave wages for which such credit is so allowed.
“(2) QUALIFIED HEALTH PLAN EXPENSES.—For purposes of this subsection, the term ‘‘qualified health plan expenses’’ means amounts paid or incurred by the employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Internal Revenue Code of 1986), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a) of such Code.
“(3) ALLOCATION RULES.—For purposes of this section, qualified health plan expenses shall be allocated to qualified family leave wages in such manner as the Secretary of the Treasury (or the Secretary's delegate) may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among covered employees and pro rata on the basis of periods of coverage (relative to the time periods of leave to which such wages relate).
“(e) SPECIAL RULES.—
“(1) DENIAL OF DOUBLE BENEFIT.—For purposes of chapter 1 of such Code, the gross income of the employer, for the taxable year which includes the last day of any calendar quarter with respect to which a credit is allowed under this section, shall be increased by the amount of such credit. Any wages taken into account in determining the credit allowed under this section shall not be taken into account for purposes of determining the credit allowed under section 45S of such Code.
“(2) ELECTION NOT TO HAVE SECTION APPLY.—This section shall not apply with respect to any employer for any calendar quarter if such employer elects (at such time and in such manner as the Secretary of the Treasury (or the Secretary's delegate) may prescribe) not to have this section apply.
“(3) CERTAIN TERMS.—Any term used in this section which is also used in chapter 21 of such Code shall have the same meaning as when used in such chapter.
“(4) CERTAIN GOVERNMENTAL EMPLOYERS.—This credit shall not apply to the Government of the United States, the government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.
“(f) REGULATIONS.—The Secretary of the Treasury (or the Secretary's delegate) shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including—
“(1) regulations or other guidance to prevent the avoidance of the purposes of the limitations under this section,
“(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section,
“(3) regulations or other guidance providing for waiver of penalties for failure to deposit amounts in anticipation of the allowance of the credit allowed under this section,
“(4) regulations or other guidance for recapturing the benefit of credits determined under this section in cases where there is a subsequent adjustment to the credit determined under subsection (a), and
“(5) regulations or other guidance to ensure that the wages taken into account under this section conform with the paid leave required to be provided under the Emergency Family and Medical Leave Expansion Act (including the amendments made by such Act).
“(g) APPLICATION OF SECTION.—This section shall apply only to wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury (or the Secretary's delegate) which is during the 15-day period beginning on the date of the enactment of this Act, and ending on March 31, 2021.
“(h) TRANSFERS TO FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND.—There are hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of this section (without regard to this subsection). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund or Account had this section not been enacted.”