Employers just received additional penalty relief for your federal employment tax deposits reduced in anticipation of COVID-19-related tax credits. And it comes straight from IRS.
That includes both deposits of withheld income taxes and employment taxes.
Under IRS Notice 2021-24, employers can reduce the amount of employment taxes owed by the amount of qualified wages paid that would be eligible for each credit. And you won’t face any penalties for late tax deposits.
Which COVID tax credits count for penalty relief
Your company can take advantage of this relief if you can claim the following tax credits:
- Paid sick and family leave credits under the Families First Coronavirus Response Act for qualified leave wages employers paid between Jan. 1, 2021, and March 31, 2021
- Paid sick and family leave credits added under Sec. 9641 of the American Rescue Plan Act (ARPA) for qualified leave wages paid from April 1, 2021, to Sept. 30, 2021
- The employee retention credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act for qualified wages paid from Jan. 1, 2021, to June 30, 2021
- The employee retention credit added under Sec. 9651 of the ARPA for qualified wages paid from July 1, 2021, to Dec. 31, 2021, and
- The tax credit for offering COBRA continuation coverage premium assistance added under Sec. 9501(b) of the ARPA from April 1, 2021, to Sept. 30, 2021.