Emergency Leave Act and Iowa Filing & Payment Extension

Updated March 19, 2020 at 4:45 p.m.

President Trump recently signed the Emergency Family and Medical Leave Expansion Act requiring paid sick and family leave for qualified employees impacted by the Coronavirus Pandemic. The law generally applies to employers with fewer than 500 employees and adds two classes of qualified paid leave. It does not appear that employers with more than 500 employees fall under the scope of the new provisions. The Secretary of the Department of Labor is authorized to issue regulations to exempt employers with less than 50 employees when the imposition of the rules would jeopardize the entity’s ability to continue as a going concern. It is uncertain how this provision would be applied.

Qualifying leave consists of the following:

• The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
• The employee is caring for an individual who is subject to an order or has been advised to self-quarantine.
• The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child-care provider of such son or daughter is unavailable, due to COVID-19 precautions.
• The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

To offset the cost of providing this additional leave, employers are allowed a refundable tax credit to offset their OASDI (the employer portion of social security tax) portion of payroll taxes. The credit would be claimed quarterly when employers file payroll tax returns. The credit is effective for wages paid between a date to be determined (within 15 days of enactment) and December 31, 2020. Employers can claim a credit equal to 100% of qualified sick leave and qualified family leave wages paid for the quarter with certain limitations. Note that a credit is a direct dollar for dollar reduction in the amount of OASDI tax the employer is required to remit to the government.

Qualified Sick Leave

Qualified sick leave generally applies to employees staying home due to quarantining or to care for a sick family member and allows up to 10 days of paid leave.

The credit is generally limited to $200 per employee per day (up to 10 days) for qualified sick leave wages up to an aggregate of $2,000 per employee. That amount is increased to $511 per day if the employee is on leave due to any of the following:

• Is subject to a federal, state, or local quarantine or isolation order relating to COVID-19
• Has been advised by a health care provider to self-quarantine due to concerns relating to COVID-19
• Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis

Qualified Family Leave

Qualified family leave is for employees needing to care for a child due to school or childcare closings. The credit for qualified family leave wages for employees is $200 per day up to an aggregate of $10,000 per employee. This credit is designed to cover up to two-thirds of employee’s wages for up to three months.

Self Employed Taxpayers

Self-employed taxpayers are allowed a similar credit against their regular income tax on their personal tax returns. The limit for self-employed persons is formula driven to 67% of the taxpayer's average daily self-employment income, up to either $200 or $511 depending upon the classification of the leave. Self-employed individuals should consult with their tax advisor and determine eligibility for the credit and whether an adjustment to quarterly estimated income tax payments is prudent.

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Iowa Extends Tax Return and Tax Payment Due Dates

The Director of the Iowa Department of Revenue executed an order extending the filing and payment deadline for several state tax types. The order applies to Iowa tax returns and any associated tax due on those returns if the due date is on or after March 19, 2020 and before July 31, 2020. The due date for these tax returns and taxes is now July 31, 2020.

The order provides relief for the following tax types:

• IA 1040 Individual Income Tax Return and all supporting forms and schedules
• IA 1040C Composite Return and all supporting forms and schedules
• IA 1041 Fiduciary Return and all supporting forms and schedules
• IA 1120 Corporation Income Tax Return and all supporting forms and schedules
• IA 1120F Franchise Tax Return for Financial Institutions and all supporting forms and schedules
• IA 1065 Iowa Partnership Return and all supporting forms and schedules
• IA 1120S S Corporation Return and all supporting forms and schedules
• Credit Union Moneys and Credits Tax Confidential Report

No late-filing or underpayment penalties shall be due for qualifying taxpayers who comply with the extended filing and payment deadlines in this order. Interest on unpaid taxes covered by this order shall be due beginning on August 1, 2020.

Income Tax Withholding

The Department of Revenue also extended the income tax withholding deposit due date for the period ending March 15, 2020, from March 25, 2020 to April 10, 2020. This applies to taxpayers doing business in Iowa and who remit withholding on a semi-monthly basis.