IRS Issues Guidance for Reporting FFCRA Wages

The IRS has issued guidance addressing employer reporting requirements for qualified sick leave and qualified family leave wages under the Families First Coronavirus Response Act (FFCRA).  The FFCRA is one of the first pieces of federal legislation that was enacted in response to the COVID-19 pandemic.  It requires employers with fewer than 500 employees to provide employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19.  (For more information regarding the FFCRA, click here).  The FFCRA does, however, permit employers who make qualified wage payments pursuant to the FFCRA to receive a payroll tax credit equal to the full amount of qualified wages paid to employees from April 1, 2020, through December 31, 2020.  Public sector employers are ineligible for the payroll tax credit.  (For more information on the tax credits under the FFCRA, click here).

In Notice 2020-54, the IRS provides employers long-awaited guidance for reporting FFCRA wages paid to employees.  Employers who make qualified wage payments pursuant to the FFCRA between April 1, 2020, and December 31, 2020, must separately state each wage amount (qualified sick leave or qualified family leave) on Form W-2, Box 14, or on a separate statement, as follows:

• Reporting Qualified Sick Leave Wages. To report qualified sick leave wages, the employer must include such wages in the amount of wages paid to the employee reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form W-2.  Employers must also report to the employee, in Box 14, the total amount of qualified sick leave wages paid, subject to the applicable dollar limit, and the qualifying reasons for such wages.  The employer must use the following language in labeling this amount: “sick leave wages subject to the $511 (or $200, as applicable) per day limit.”
• Reporting Qualified Family Leave Wages. To report qualified family leave wages, the employer must include such wages in the amount of wages paid to the employee reported in Boxes 1, 3 (up to the social security wage base), and 5 of Form W-2.  Employers must also separately report to the employee, in Box 14, the total amount of qualified family leave wages paid to the employee, using the following language: “emergency family leave wages.”

The IRS Notice includes model language for employee instructions on the Form W-2, on page 8 of the Notice (available here).