March 20, 2020Coronavirus/COVID-19 Update- Iowa specific items and federal legislation update
Coronavirus/COVID-19 Update
The below update summarizes a few Iowa specific items and summarizes the final federal legislation that expands FMLA leave and providing Paid Sick leave
IOWA
Property Tax payments have been temporarily suspended with no penalty or interest charged for the duration of the Disaster Emergency Proclamation.
Withholding – the March 25th withholding deposit deadline for semi-monthly filers has been extended from March 25, 2020 to the new deposit due date April 10, 2020. It applies to Iowa residents or other taxpayers doing business in Iowa who remit income tax withholding on a semi-monthly basis. No late filing or underpayment penalties will be due for qualifying taxpayers who comply with the extended filing and payment deadlines in this order.
Unemployment – Workers who are laid off due to COVID-19 or who are self-isolating, caring for a family member or ill from COVID-19 may be eligible to receive unemployment benefits. One of the eligibility requirements is working for wages from an employer who claims the worker as an employee in six of the last 18 months and has earned at least $2,500 in the same time period. Claims directly and indirectly related to COVID-19 will not be charged to employers
H.R. 6201, Families First Coronavirus Response Act – signed into law Wednesday, March 18
Emergency Paid Sick Leave Act – Certain employers are required to provide paid sick leave to employees who are unable to work or telework under certain circumstances.
Eligible employees are: (1) employees of employers with 500 of fewer workers; (2) local, state, and government employees; and (3) employees who work under multiemployer collective agreement and whose employers pay into a multiemployer plan. There are two different pools of eligibility:
For employees subject to a quarantine or isolation, is experiencing symptoms of COVID-19 or is seeking a diagnosis and/or treatment, eligible full-time employees may receive up to 80 hours (two weeks) of paid emergency sick leave (up to $511 per day). Eligible part-time employees are entitled to paid sick leave for the typical number of hours worked in a two-week period (up to $511 per day). A self-employed individual is allowed the same benefit with a daily max of the smaller of $511 or daily self-employment income (annual taxable earnings divided by 260).
For employees who are caring for a family member or a child during a school or childcare provider closing or experiencing a substantially similar condition, eligible full-time employees may receive up to 80 hours (two weeks) of paid time off at two-thirds (2/3) of their regular pay (up to $200 per day). Eligible part-time employees are entitled to paid leave for the typical number of hours worked in a two-week period at two-thirds (2/3) of their regular pay (up to $200 per day). A self-employed individual is allowed the same benefit with a daily max of the smaller of $200 or 67% of the average daily self-employment income (annual taxable earnings divided by 260).
Emergency Paid Family Leave – Certain employers are required to provide paid family leave to employees who are unable to work or telework under certain circumstances. Paid family leave is available for eligible employees to take care of a child in the event of a school closure or if a childcare provider in unavailable due to COVID-19. Note, the traditional one-year employment and 1,250 hours does not apply here. Eligible time worked for the Act is at least 30 calendar days.
Eligible employees are: (1) employees of employers with 500 of fewer workers; (2) local, state, and government employees; and (3) employees who work under multiemployer collective agreement and whose employers pay into a multiemployer plan. There are two different pools of eligibility:
Eligible employees may take up to 12 weeks of job-protected leave. The first two weeks of leave is unpaid and is followed by 10 weeks of paid leave. Employees may use other available paid leave during the two weeks of unpaid leave under the bill. Employees will receive no less than 2/3 of the employee’s usual pay. Paid family leave may not exceed $200 per day and $10,000 in total.
Eligible self-employed individuals are allowed an income tax credit for a qualified family leave equivalent amount. The qualified family leave equivalent amount is up to 50 days during the taxable year the self-employed individual cannot perform services due to taking care of a child in the event of a school closure or if a childcare provider is unavailable due to COVID-19. The credit is up to: (1) 67% of the average daily self-employment income or (2) $200 per day. The available credit is up to $10,000.
Provisions applicable to both Paid Sick Leave and Paid Family Leave.
- Paid sick leave and paid family leave will not be considered wages for the employer or the employee for the purposes of FICA (Social Security and Medicare) or RRTA tax.
- While employers will front the cost of paid sick leave and paid family leave, the federal government will fully reimburse the employer within three months. The reimbursement will cover wages and the employer’s contribution to the employee’s health insurance premiums (“qualified health plan expenses”) during the period of leave to the extent that such amounts are excluded from the gross income of employees under Code Sec. 106(a). The reimbursement will be through refundable tax credits against the employers’ payroll tax. Paid sick and paid family leave expenses will be submitted as part of the estimated quarterly tax payments. A refund will be made if the costs are greater than the employer’s tax liability.
- Employers of health care providers or emergency responders may choose to exclude those employees from the expanded FMLA and Sick Leave Acts.
- An absence because the employee is trying to avoid exposure is not FMLA-protected leave
The above Acts are subject to final interpretations and government regulations on several aspects but we wanted to inform our clients of the basics, as we currently understand them. Government agencies are expected to issue more guidance in the next two weeks. This is not an exhausted listing as there are many more grant and relief programs pending or already approved. We will disseminate these are appropriate. We will also keep the most updated information and applicable links on our web site (www.lattaharris.com) Watch our website www.lattaharris.com and social media postings for any further updates or developments affecting these issues.
We appreciate your understanding as we all navigate through this unprecedented time and thank you for giving us the privilege to be your trusted tax preparer and consultant.
LattaHarris, LLP
