Yesterday the IRS issued guidance to employers relating to emergency paid sick leave (EPSL) and emergency paid FMLA (FMLA+) under recently passed coronavirus legislation. This guidance contain important information about the documentation employers need to collect from employees who are requesting COVID-19-related paid leave, as well as documents employers should maintain for tax credit purposes.
A: General Request for Paid Leave
In order to request EPSL or FMLA+, the employee must submit a written request for leave. This request must include:
- The employee’s name;
- Requested dates for leave;
- Written statement explaining the COVID-19-related reason for the leave and any support for the reason; and
- A statement that the stated reason is why the employee is unable to work, even remotely via telework.
B: Additional Information Required for Leave Due to Quarantine or Self-Quarantine
In addition to the information listed in Section A above, employees requesting leave due to a quarantine order or self-quarantine advice from a medical provider must also provide employers with the following:
- The name of either the governmental entity ordering the employee to quarantine or the name of the health care professional advising the employee to self-quarantine; and
- If the quarantine or advised self-quarantine order is being imposed on someone other than the employee, then that person’s name and their relationship to the employee must be provided.
C: Additional Information Required for Leave Due to Child’s School or Child Care Closing
If an employee’s leave request is based on an employee’s child’s school or child care being closed, the employee’s statement should include the following, in addition to the information listed in Section A above:
- Name and age of child being cared for due to school closure or child care unavailability;
- Name of school that is closed or child care that is unavailable;
- Representation that no other person will be providing care for the child during the period for which the employee is receiving paid leave; and
- If an employee is using leave to care for a child over 14 years old, then the statement must identify the special circumstances requiring such care.
Because the statement must include a representation that no other person will be caring for a child, the IRS’s position indicates that leave does not need to be provided for both parents at the same time, or if another individual can care for the child.
D: Records Employers Should Retain to Obtain Tax Credit
In order to establish a right to a tax credit, employers should retain records establishing that employees legitimately took EPSL or FMLA+ leave. The IRS recommends the following records be retained:
- Records and documentation related to and supporting each employee’s reason for taking leave to substantiate the claim for the credits.
- Records and documents related to and supporting how the employer determined the amount of qualified sick and family leave wages paid to eligible employees, including an employee’s work, telework, and qualified family leave records.
- Records and documents showing how the employer determined the amount of qualified health plan expenses the employer allocated to wages.
- Copies of completed Forms 941 – Employer’s Quarterly Federal Tax Return submitted to the IRS.
- Copies of any completed Forms 7200 – Advance of Employer Credits Due to COVID-19 submitted to the IRS.
Employers should keep all records of employment taxes for at least four years after the date the tax becomes due or is paid, whichever is later.