26 USC 3131 - Credit for paid sick leave

View all text of Subchapter D [§ 3131 - § 3134]

§ 3131. Credit for paid sick leave

(a) In general

(b) Limitations and refundability

(1) Wages taken into account

(2) Overall limitation on number of days taken into account

The aggregate number of days taken into account under paragraph (1) for any calendar quarter shall not exceed the excess (if any) of—

(A) 10, over

(B) the aggregate number of days so taken into account during preceding calendar quarters in such calendar year (other than the first quarter of calendar year 2021).

(3) Credit limited to certain employment taxes

(4) Refundability of excess credit

(A) Credit is refundable

(B) Advancing credit

For purposes of this section—

(1) In general

(2) Rules of application

For purposes of determining whether wages are qualified sick leave wages under paragraph (1)—

(A) In general

The Emergency Paid Sick Leave Act shall be applied—

(i) by inserting “, the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis, or the employee is obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization” after “medical diagnosis” in section 5102(a)(3) thereof, and

(ii) by applying section 5102(b)(1) of such Act separately with respect to each calendar year after 2020 (and, in the case of calendar year 2021, without regard to the first quarter thereof).

(B) Leave must meet requirements

(d) Allowance of credit for certain health plan expenses

(1) In general

(2) Qualified health plan expenses

(3) Allocation rules

(e) Allowance of credit for amounts paid under certain collectively bargained agreements

(1) In general

The amount of the credit allowed under subsection (a) shall be increased by the sum of—

(A) so much of the employer’s collectively bargained defined benefit pension plan contributions as are properly allocable to the qualified sick leave wages for which such credit is so allowed, plus

(B) so much of the employer’s collectively bargained apprenticeship program contributions as are properly allocable to the qualified sick leave wages for which such credit is so allowed.

(2) Collectively bargained defined benefit pension plan contributions

For purposes of this subsection—

(A) In general

The term “collectively bargained defined benefit pension plan contributions” means, with respect to any calendar quarter, contributions which—

(i) are paid or incurred by an employer during the calendar quarter on behalf of its employees to a defined benefit plan (as defined in section 414(j)), which meets the requirements of section 401(a),

(ii) are made based on a pension contribution rate, and

(iii) are required to be made pursuant to the terms of a collective bargaining agreement in effect with respect to such calendar quarter.

(B) Pension contribution rate

The amount of collectively bargained defined benefit pension plan contributions allocated to qualified sick leave wages for any calendar quarter shall be the product of—

(i) the pension contribution rate (expressed as an hourly rate), and

(ii) the number of hours for which qualified sick leave wages were provided to employees covered under the collective bargaining agreement described in subparagraph (A)(iii) during the calendar quarter.

(3) Collectively bargained apprenticeship program contributions

For purposes of this section—

(A) In general

The term “collectively bargained apprenticeship program contributions” means, with respect to any calendar quarter, contributions which—

(i) are paid or incurred by an employer on behalf of its employees with respect to the calendar quarter to a registered apprenticeship program,

(ii) are made based on an apprenticeship program contribution rate, and

(iii) are required to be made pursuant to the terms of a collective bargaining agreement that is in effect with respect to such calendar quarter.

(B) Registered apprenticeship program

(D) Allocation rules

The amount of collectively bargained apprenticeship program contributions allocated to qualified sick leave wages for any calendar quarter shall be the product of—

(i) the apprenticeship program contribution rate (expressed as an hourly rate), and

(f) Definitions and special rules

(1) Applicable employment taxes

For purposes of this section, the term “applicable employment taxes” means the following:

(A) The taxes imposed under section 3111(b).

(B) So much of the taxes imposed under section 3221(a) as are attributable to the rate in effect under section 3111(b).

(2) Wages

(3) Denial of double benefit

(4) Election to not take certain wages into account

(5) Certain governmental employers

(6) Extension of limitation on assessment

Notwithstanding section 6501, the limitation on the time period for the assessment of any amount attributable to a credit claimed under this section shall not expire before the date that is 5 years after the later of—

(A) the date on which the original return which includes the calendar quarter with respect to which such credit is determined is filed, or

(B) the date on which such return is treated as filed under section 6501(b)(2).

(7) Coordination with certain programs

(A) In general

This section shall not apply to so much of the qualified sick leave wages paid by an eligible employer as are taken into account as payroll costs in connection with—

(i) a covered loan under section 7(a)(37) or 7A of the Small Business Act,

(ii) a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or

(iii) a restaurant revitalization grant under section 5003 of the American Rescue Plan Act of 2021.

(B) Application where PPP loans not forgiven

The Secretary shall issue guidance providing that payroll costs paid during the covered period shall not fail to be treated as qualified sick leave wages under this section by reason of subparagraph (A)(i) to the extent that—

(i) a covered loan of the taxpayer under section 7(a)(37) of the Small Business Act is not forgiven by reason of a decision under section 7(a)(37)(J) of such Act, or

(ii) a covered loan of the taxpayer under section 7A of the Small Business Act is not forgiven by reason of a decision under section 7A(g) of such Act.

Terms used in the preceding sentence which are also used in section 7A(g) or 7(a)(37)(J) of the Small Business Act shall, when applied in connection with either such section, have the same meaning as when used in such section, respectively.

(g) Regulations

The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including—

(1) regulations or other guidance to prevent the avoidance of the purposes of the limitations under this section,

(2) regulations or other guidance to minimize compliance and record-keeping burdens under this section,

(3) regulations or other guidance providing for waiver of penalties for failure to deposit amounts in anticipation of the allowance of the credit allowed under this section,

(4) regulations or other guidance for recapturing the benefit of credits determined under this section in cases where there is a subsequent adjustment to the credit determined under subsection (a),

(5) regulations or other guidance to ensure that the wages taken into account under this section conform with the paid sick time required to be provided under the Emergency Paid Sick Leave Act,

(6) regulations or other guidance to permit the advancement of the credit determined under subsection (a), and

(7) regulations or other guidance with respect to the allocation, reporting, and substantiation of collectively bargained defined benefit pension plan contributions and collectively bargained apprenticeship program contributions.

(h) Application of section

(i) Treatment of deposits

(j) Non-discrimination requirement

(Added Pub. L. 117–2, title IX, § 9641(a), Mar. 11, 2021, 135 Stat. 161.)