IRS Requires W-2 Reporting on FFCRA Leave

On July 8, 2020, the IRS released Notice 2020-54 providing guidance on W-2 reporting obligations related to qualified paid leave under the Families First Coronavirus Response Act (FFCRA). As background, the FFCRA requires employers with fewer than 500 employees to provide paid leave in certain circumstances related COVID-19 through the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. (For additional information on the paid leave provisions of the FFCRA, see our prior Compliance Corner article from March 31, 2020, “Families First Coronavirus Response Act Passed and Agencies Provide Related Guidance”).

Per the guidance, employers will be required to report the amounts of paid leave either on Form W-2, Box 14, or on a separate statement. Further, the IRS explains that if a separate statement is provided and the employee receives a paper W-2, then the statement must be included with the W-2 provided to the employee. Similarly, if the employee receives an electronic W-2, then the statement must be provided in the same manner and at the same time as the electronic W-2.

This required reporting provides employees who are also self-employed with information necessary for properly claiming qualified sick leave equivalent or qualified family leave equivalent credits under the FFCRA. To that end, the employer may provide additional information as part of the instructions (Notice 2020-54 provides model language) about qualified paid leave wages and explain that these wages may limit the amount of the credits to which the employee may be entitled with respect to any self-employment income.

Employers providing qualified paid leave under the FFCRA should be aware of this new requirement and confirm compliance with any payroll vendors.

IRS Notice 2020-54

This information has been provided as an informational resource for Lenox Advisors, Inc. clients and business partners. It is intended to provide general guidance, and is not intended to address specific risk scenarios. Regarding insurance coverage questions, each specific policy must be reviewed in its entirety to determine the extent, if any, of coverage available for the impact of the Coronavirus. If you have questions, please reach out to your Lenox contact. Certain links to third party materials are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Lenox Advisors, Inc. Lenox Advisors, Inc. expressly disclaims any liability for the accuracy, legality or content of the external site or for that of subsequent links. Please contact the external source for answers to questions regarding its content.

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