On September 7, 2021, the IRS issued Notice 2021-53. This notice provides guidance on how to report the amount of qualified sick and family leave wages paid to employees for leave taken in 2021 on Form W-2. This guidance includes considerations for such leave taken in accordance with the FFCRA, as amended by the CARES Act, and the American Rescue Plan Act (ARPA).
The FFCRA required employers with fewer than 500 employees to provide emergency paid sick leave (EPSL) and extended FMLA (EFMLA) for those employees for specific reasons relating to the pandemic. The employers had to front the cost of that leave; however, they were reimbursed for those costs by obtaining a tax credit. The CARES Act extended these leaves to March 31, 2021, but it became voluntary. Similarly, the ARPA extended the voluntary leaves until September 31, 2021, allowed employees to use EPSL for reasons related to the vaccine, and expanded the reasons employees could take EFMLA. More information on the ARPA amendments to these leaves can be found in this article in the March 18, 2021, edition of Compliance Corner.
The notice makes clear that employers must report these wages to employees in one of two ways: either on Form W-2, Box 14, or in a separate statement provided with the Form W-2. The guidance provides employers with model language to use as part of the Instructions for Employee for the Form W-2 or on the separate statement provided with the Form W-2.
Employers that chose to extend EPSL and EFMLA to their employees should be aware of this notice.
IRS Notice 2021-53 »
PPI Benefit Solutions does not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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