IRS Issues Guidance Regarding Required Documentation for EFML and EPSL

By Caitlin Egeck, JD, HR & Compliance Consultant
Cascade Employers Association
[email protected]

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As we previously alerted, the Family First Coronavirus Response Act (FFCRA), signed into law on March 18, 2020 and effective April 1, 2020, provides eligible employers (with fewer than 500 employees) funds to provide employees with Emergency Family and Medical Leave (EFML) and Emergency Paid Sick Leave (EPSL). Such funds are available to eligible employers in the form of refundable tax credits. Late on March 31, 2020, the Internal Revenue System (IRS) outlined what specific documentation employers may require from employees who take EFML and/ EPSL in order to receive the tax credits for such payments.

Employee Documentation for EFML and EPSL Paid Leave

The IRS makes it clear that an employee must submit written documentation in support of their need for EFML and/or EPSL which includes:

  1. The employee’s name;
  2. The date or dates for which leave is requested;
  3. A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
  4. A statement that the employee is unable to work, including by means of telework, for such reason.

Employee Documentation for EPSL based on Quarantine Order and/or Self-Quarantine

If an employee’s request is based on a quarantine order or self-quarantine needs, the IRS states the documentation from that employee should include:

  1. The name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and,
  2. If the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.

Employee Documentation for EFML and EPSL Relating to Child-Care and School Closings

If an employee’s leave request is based on a school closing or child care provider being unavailable, the statement from that employee should include:

  1. The name and age of the child (or children) to be cared for,
  2. The name of the school that has closed or place of care that is unavailable, and
  3. A representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and,
  4. With respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

Important Note: For EMFL and EPSL relating to child care and school closings, the IRS clarifies that the employee alone must be caring for the child(ren) and if someone else is present for the care for the child(ren), this leave is not available.

For members of Cascade, click here to view a sample Employee Leave Request Form.

Additional Important Employer Records

In order to establish that an employee lawfully took EFML and/or EPSL for the tax credit reimbursement, employers must create and maintain records that include the following information:

  1. Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
  2. Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages (outlined under “Determining the Amount of Allocable Qualified Health Plan Expenses”) for methods to compute this allocation.
  3. Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
  4. Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer’s entitlement to the credit claimed on Form 941).

Employer Recordkeeping

According to the IRS guidance, employers should keep all records of employment taxes for at least 4 years after the date the tax becomes due or is paid, whichever comes later. Moreover, employers should be prepared to have such records available for IRS review.

Please do not hesitate to reach out if you have any questions.

 

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