CSLFRF Taxability and Reporting of Payment FAQs

General Questions

Question

Guidance Review

Source/Reference in Treasury Guidance

If premium pay is provided to state/local government employees, are payments considered taxable as wages?

Premium pay amounts paid to employees are considered wages. Employers generally must withhold federal income tax as well as social security tax and Medicare tax from employees' wages. (Employers also may have to pay federal unemployment tax on the wages.)

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Are grants provided by state/local governments to employers to be used to provide premium pay to eligible workers during the COVID-19 pandemic considered taxable as wages?

Regardless of whether an amount is paid to an employee by their state/local government, or by their employer, a payment that is in the nature of compensation for services is not excludable as a qualified disaster relief payment under section 139 of the Code. If you are performing services as an employee, the premium pay is also generally considered wages and is subject to withholding of applicable taxes.

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Are payments to households for utility assistance considered taxable?

Payments to individuals from SLFRF for utilities (or arrearages of utilities) is NOT considered income and therefore a Form 1099-MISC is not required.

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