Is an employer prohibited from taking the Family / Sick Leave Tax Credit on their Quarter 2 Form 941 if they received a PPP loan a month after they paid the COVID-19 sick pay?
On their 4/1/20 payroll, client paid 40 hours (per employee) for COVID-19 sick leave since employees were quarantined (CA quarantine order) from 3/16/20 – 3/31/20. On May 1st, they finally received a PPP loan.
Will any of this prohibit them from claiming the Family / Sick Leave Tax Credit on their Quarter 2 Form 941?
The payroll tax credits for mandatory paid family leave and paid sick leave provided by the Families First Coronavirus Response Act (FFCRA) are completely independent of the PPP loans. You can claim these credits whether or not you receive a PPP loan, even if the PPP loan is forgiven.
It is only the Employee Retention Credit, which was created under the CARES Act that interplays with the PPP loans.