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Plea for Guidance on Emergency Sick Leave Credit

Posted on Mar. 30, 2020

In this post, guest blogger Bob Rubin identifies guidance urgently needed under the Families First Coronavirus Response Act (FFCRA). Christine

This is a plea for guidance on a national issue for which the rubber hits the road on April 1.

Before I beg, I observe that likely it is only people who read this blog, and Service employees, who understand what a burden the FFCRA and the CARES Act place on the Service. The entire federal tax deposit system needs to be redesigned, and at the same time the Service has to be ready to process FFCRA “accelerated payment requests” within two weeks, while short-staffed and working remotely. How do “accelerated payment requests” fit within section 6511? My hat is off to the Service for undertaking this task while under duress. We all need to be patient with the Service. We all need to do what we can to lessen the burdens of the Service, for example by dampening client expectations based upon press reports on the speed at which the Service can act.

Despite my understanding of the need for patience, I beg for guidance on an issue of immediate importance.

Governor Newsom issued an Order ordering “all individuals living in the State of California to stay home or at their place of residence, except as needed to maintain continuity of operation of the federal critical infrastructure sectors” on March 19, 2020.  Critical infrastructure includes, “Professional services, such as legal or accounting services, when necessary to assist in compliance with legally mandated activities and critical sector services.”

In response to the Order, we furloughed much of our staff and directed all attorneys to work at home. If the Order qualifies as a “Federal, State, or local quarantine or isolation order related to COVID-19,” pursuant to section 5102(a)(1) of the Emergency Paid Sick Leave Act (part of FFCRA), then starting on April 1, we are mandated to pay our staff, who cannot work from home, 10 days of emergency sick at a maximum of $511 per day for 10 days, and pursuant to the Tax Credit for Paid Sick and Paid Family and Medical Leave Act, we will get a dollar-for-dollar FICA tax credit for the emergency sick leave wages we pay. If the credit is in excess of the employer’s share of the tax due in a federal tax deposit, a “request for an accelerated payment” can be made immediately, and the Service “will process these requests in two weeks or less.” IR-2020-57, March 20, 2020. I hope my friends in the National Office did not have a severe medical emergency when they read the Information Release.

There is no guidance on whether the Order is a “Federal, State, or local quarantine or isolation order related to COVID-19.” The Order is probably very similar to the orders issued in New York, Washington and other states. So, this is a national issue.

My non-tax partners, based upon the “plain meaning of the Order,” think I am crazy for thinking the Order does not qualify as a “Federal, State, or local quarantine or isolation order related to COVID-19.” However, there has been no guidance from the Government, the words quarantine or isolation do not appear in the Order and, since lawyers are a part of the critical infrastructure, the Order provisions “to stay home or at their place of residence” do not apply to our employees.

There are tons of policy reasons for the Government to take the position the Order is a “Federal, State, or local quarantine or isolation order related to COVID-19.”  There is a serious fiscal reason to take a contrary position.  What did Congress intend?  I do not blame the Service for the lack of guidance. The Service probably is awaiting a decision by Treasury.  Please, Treasury, provide guidance to the Service on whether Governor Newsom’s Order is a “Federal, State, or local quarantine or isolation order related to COVID-19.”  Time is critical since the first emergency sick leave wages are payable April 1.  I hope my friends in the National Office can help. 

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