The Washington Report

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September 26, 2018

Other HR/Employment

On September 24, 2018, the Internal Revenue Service (IRS) announced that eligible employers who provide paid family and medical leave to their employees may qualify for a new business credit for tax years 2018 and 2019 (Notice 2018-71). In the Notice, the IRS provides detailed guidance on the new credit in a question-and-answer format. The credit was enacted by the 2017 Tax Cuts and Jobs Act.

Eligible employers who set up qualifying paid family and medical leave programs or amend existing programs by December 31, 2018, will be eligible to claim the employer credit for paid family and medical leave, retroactive to the beginning of the employer’s 2018 tax year, for qualifying leave already provided. Notice 2018-71 clarifies how to calculate the credit, including the application of special rules and limitations. According to the IRS, only paid family and medical leave provided to employees whose prior-year compensation was at or below a certain amount qualify for the credit. Generally, for tax year 2018, the employee’s 2017 compensation from the employer must have been $72,000 or less.

The IRS news release is available here.

IRS Notice 2018-71 is available here.