IRS Issues Further Guidance on Payroll Tax Relief
April 1, 2020 by Joshua Smeltzer
The CARES Act is now law, however, guidance is still needed on many of the details of the 880 page legislation. The IRS recently issued further guidance on how some of the payroll tax relief provisions of the new law will work. The IRS issued Notice 2020-21 regarding the effective date for Employment Tax Credits under the Families First Coronavirus Response Act (FFCRA). This notice clarifies that it applies to wages paid on April 1, 2020 through December 31, 2020 as well as other details on computing the available credit. Notice 2020-22 provides relief to employers entitled to the new credits under the FFCRA and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under the FFCRA and the CARES Act an employer paying Qualified Leave Wages or Qualified Retention Wages may take refundable tax credits against a portion of the employer’s share of certain Employment taxes. The notice provides relief from the penalties otherwise associated with failure to deposit the proper withholding taxes.
The IRS has also issued new FAQs regarding the Employee Retention Credit under the CARES Act. Taxpayers should note that an eligible employer may not receive both the Employee Retention Credit and a Small Business Interruption Loan under the Paycheck Protection Program (also available under the CARES Act). Also, IRS FAQs are considered authority by the IRS and can be changed by the IRS, sometimes without warning. The details of this new relief for small business owners is still developing and taxpayers and business owners will need to assess their needs and how to best serve the needs of their company and employees. If you have questions regarding your specific facts you should reach out to a Brown Fox attorney.