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Issue Number: 2021-08

Inside This Issue

1. What employers need to know about repayment of deferred payroll taxes
2. IRS updates its paid sick and family leave tax credits FAQs
3. Gross receipts safe harbor for employers claiming the Employee Retention Credit
4. Technical guidance
5. National Small Business Week 2021 Virtual Summit September 13 – 15
6. Draft forms on IRS.gov

The Coronavirus, Aid, Relief and Economic Security Act – CARES Act – allowed employers to defer withholding and payment of the employee's Social Security taxes on certain wages paid in calendar year 2020.

Repayment of the employee's portion of the deferral started January 1, 2021, and will continue through December 31, 2021. The employer should send repayments to the IRS as they collect them. If the employer does not repay the deferred portion on time, penalties and interest will apply to any unpaid balance.

Employers can make the deferral payments through the Electronic Federal Tax Payment System (EFTPS) or by credit/debit card, money order or with a check. These payments must be separate from other tax payments to ensure they are applied to the deferred payroll tax balance. IRS systems won't recognize the payment if it is with other tax payments or sent as a deposit.

Also, there are special considerations in repaying the deferred taxes when an employer uses a third party payer that files aggregate Forms 941 and 943 under its own EIN.

Check out this IRS Tax Tip for more information on third party payers and deferred taxes, and learn about:

• Important dates associated with the deferred taxes
• How to make payments for deferred tax reported by third party payer aggregate filers

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The IRS updated its frequently asked questions (FAQs) on the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARP). The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19. They also clarify claiming credits for leave provided for caring for a family or household member or certain other individuals recovering from the immunization.

The FAQs also include information on how eligible employers may claim the paid sick and family leave credits, including how to file for and compute the applicable credit amounts. And finally, they explain how to receive advance payments for and refunds of the credits.

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Treasury and the IRS issued a safe harbor allowing employers to exclude certain items from their gross receipts solely for determining eligibility for the Employee Retention Credit (ERC).

Revenue Procedure 2021-33 provides a safe harbor permitting employers to exclude certain amounts from gross receipts solely for determining eligibility for the ERC. These amounts are:

• The amount of the forgiveness of a Paycheck Protection Program Loan
• Shuttered Venue Operators Grants under the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act
• Restaurant Revitalization Grants under the American Rescue Plan Act of 2021

An employer elects to apply the safe harbor by excluding these amounts solely for determining whether it is an eligible employer for a calendar quarter for purposes of claiming the ERC on its employment tax return.

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• Notice 2021-46 provides additional guidance on issues relating to the application of § 9501 of the American Rescue Plan Act of 2021 (the ARP), which provides temporary premium assistance for Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation coverage.
• Notice 2021-49 provides guidance on the employee retention credit provided under section 3134 of the Internal Revenue Code (the Code), as added by section 9651 of the American Rescue Plan Act (ARP), applicable to qualified wages paid after June 30, 2021, and before January 1, 2022.

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The Small Business Administration will host a three-day live summit of learning and online education sessions for small businesses on September 13 – 15, 2021.

This year’s Small Business Week (SBW) activities will take place in a virtual atrium and will include numerous educational panels providing retooling and innovative practices for entrepreneurs as small businesses look to pivot and recover toward a stronger economy.

Also, during SBW, the IRS will encourage employers to get the word out about the advanced payments of the Child Tax Credit.

Other IRS topics will include:

• Helping employers understand reporting, deposit and payment requirements for employees and independent contractors
• Explanations of employer tax credits
• Promoting online resources available to small businesses
• Advocating the IRS’s expanded multilingual resources and services

Look for a mid-September special edition of e-News for Payroll Professionals announcing IRS activities, times and dates.

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• Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund
• Form 1095-A, Health Insurance Marketplace Statement
• Form 8922, Third-Party Sick Pay Recap

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