IRS Guidance and Resource Updates for COVID-19 Issues

The following is a roundup of recent IRS guidance and resources related to COVID-19 


COVID-19 Tax Tips series begins

To help taxpayers understand issues related to COVID-19, the IRS started a special series of Tax Tips focused on the Economic Impact Payments, tax scams and other emerging issues.

The Tax Tips are short, plain language descriptions of important tax provisions that are important to individuals, self-employed taxpayers and businesses. We hope you will help share this information with employees, family and friends, clients and members of their professional organizations.

People interested in receiving these via email can sign up on the IRS e-news subscription page and select Tax Tips.

 


Two new employer tax credits offer for relief and support for businesses

Many businesses that have been severely impacted by coronavirus (COVID-19) will qualify for two new employer tax credits:

  1. Credit for Sick and Family Leave
  2. Employee Retention Credit

Learn about these new employer tax credits at IRS.gov/coronavirus and share the information with employees, clients, and associates.

 


Update for payroll professionals and reporting agents

Our efforts to protect IRS employees, taxpayers and our stakeholders mean extremely limited services are currently available. The IRS is unable to process paper tax returns, respond to paper correspondence or staff toll-free live-service lines.

Please use all electronic options available to you on IRS.gov.

Also, here’s more information specifically for payroll professionals and reporting agents. 

 


Common errors to avoid when filing Form 7200 Advance Payment of Employer Credits Due to COVID-19

The IRS wants to remind taxpayers who are filing Form 7200 about how to reduce common mistakes and improve efficiency in order to receive an advance employer credit.

Using a reputable tax preparer – including certified public accountants, enrolled agents or other knowledgeable tax professionals – can also help avoid errors. Mistakes can result in a processing delay, which can mean it takes more time to get the credit.

Avoid these common errors when preparing Form 7200:

  • Missing or inaccurate Employer Identification Number (EIN). Each EIN on a tax return should be exact. Taxpayer are reminded to complete this box.
  • Check only one box for applicable calendar quarter. Only one box should be checked for the correct quarter.
  • Check only one box for Part 1, Line A. Likewise, only one box should be checked in Part 1, Line A.
  • Make sure to complete Part 1, Line B. In Part 1, Line B check either “Yes” or “No”.
  • Completing Part II. Taxpayers should make sure they complete all the lines in Part II.
  • Part II, Lines 1-8. Part II should be completed using dollar amounts, not the number of eligible employees.  All lines in Part II should be completed with an actual dollar amount.
  • Check the math. Taxpayers should make sure they check the math on lines 4, 7 and 8.
  • Sign the form. Taxpayers should remember to sign the form.  Failure to sign the form will result in an automatic rejection.

More information:
Form and Instructions for 7200
Coronavirus tax relief
Employer credits
FAQs

 


Employee Retention Credit available for many businesses financially impacted by COVID-19

If you missed it, the March 31 news release, Treasury Department and the Internal Revenue Service launching the Employee Retention Credit, encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

See the news release for more info, including:

  • Who qualifies
  • How it’s calculated
  • How to receive it
  • Where to find more information, including frequently asked questions about tax credits for required paid leave

 


Notice 2020-21 Effective Date for Employment Tax Credits Under the Families First Coronavirus Response Act

Notice 2020-21, Effective Date for Employment Tax Credits Under the Families First Coronavirus Response Act (PDF) provides that employment tax credits for paid qualified sick leave wages and paid qualified family leave wages required by the Families First Coronavirus Response Act (“the Act”) will apply to such wages and compensation paid for periods beginning on April 1, 2020, and ending on December 31, 2020, and that days beginning on April 1, 2020, and ending on December 31, 2020, will be taken into account for credits for paid qualified sick leave equivalents and paid qualified family leave equivalents for certain self-employed individuals provided by the Act.

 


Notice 2020-22 Relief from Penalty for Failure to Deposit Employment Taxes

Notice 2020-22, Relief from Penalty for Failure to Deposit Employment Taxes (PDF) provides a waiver of additions to tax for failure to make a deposit of taxes for employers required to pay qualified sick leave wages and qualified family leave wages mandated by the Families First Coronavirus Response Act (Families First Act) and qualified health plan expenses allocable to these wages. This notice also provides a waiver of additions to tax for failure to make a deposit of taxes for certain employers subject to a full or partial closure order due to the coronavirus disease 2019 (COVID-19) or experiencing a statutorily specified decline in business under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This notice applies to deposits of Employment Taxes (including withheld income taxes, taxes under the Federal Insurance Contributions Act and taxes under the Railroad Retirement Act) reduced in anticipation of the credits with respect to qualified sick leave wages and qualified family leave wages paid with respect to the period beginning April 1, 2020, and ending December 31, 2020. This notice applies with respect to deposits of Employment Taxes reduced in anticipation of the credits with respect to qualified wages paid with respect to the period beginning on March 13, 2020, and ending December 31, 2020. This relief ensures that such employers may pay qualified sick leave wages and qualified family leave wages required by the Families First Act or qualified wages under the CARES Act using Employment Taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty.

 


FAQs on NOLs filed with Sec. 965 Inclusions

The Internal Revenue Service has posted new Frequently Asked Questions (FAQs) about Carrybacks of Net Operating Losses (NOLs) for Taxpayers who have had Section 965 Inclusions.

It is a follow up to the material on temporary procedures that we issued last week.

 


New forms, instructions and publications on IRS.gov

New forms

New instructions

New publications