EMPLOYMENT TAX PAYMENT RELIEF

[Lee B]

"The Internal Revenue Service is providing penalty relief for an employer’s failure to deposit employment taxes with the IRS on a timely basis.

In Notice 2021-24, the IRS amplified prior guidance from 2020. The new notice provides relief for employers who are required to pay qualified sick leave wages and qualified family leave wages, along with qualified health plan expenses that can be allocated to those wages, as mandated by the Families First Coronavirus Response Act, which was amended by the COVID-related Tax Relief Act of 2020, along with the American Rescue Plan Act of 2021."   https://www.irs.gov/pub/irs-drop/n-21-24.pdf

[Medlin Software, Dennis]

This is a hot item for my customers.  Given the totality of the liabilities and credits, it may be the IRS is simply looking at Q liability vs Q deposits, for timeliness.  There is likely no reasonable way to come up with perfect daily liability numbers until the quarter has ended (for the IRS, and for all but the most skilled employers).  Some of the issues are when to apply qualified health care expenses, and when and if there is an advance from a 7200 form received.

For the average employer, paying the usual deposit amount (no credits) is a safe course, then taking credits with the 941.  For the skilled payroll person, taking some or all of the credits, by reducing deposits, can work if documented well, but it is a manual calculation for the most part.

Since the non refundable credits can be retroactively applied starting with the first payroll of the quarter, the 941b shows one set of figures, while paycheck register type reports show other figures.  Another case of those in charge wonking it up for those that do.