Relief from Retention Credit Early Termination
As discussed in our post on November 18, 2021, the employee retention credit ended early due to the enactment of the Infrastructure Investment and Jobs Act.
The IRS recently issued Notice 2021-65 which provides relief for certain employers who were affected by the early termination of the employee retention credit.
Generally, the notice waives underpayment penalties for employers who properly reduced their deposits of employment taxes in anticipation of receiving the employee retention credit, if the employers pay those taxes within the grace period. Such underpaid employment taxes must be paid by the due date for employment taxes due on wages paid on December 31, 2021. The due date will depend on the employer’s deposit schedule (i.e., monthly depositor, semiweekly depositor, etc.).
This exception applies for deposits that were due on or before December 20, 2021, and it does not apply for deposits that are due after December 20, 2021.
The notice also provides procedures for employers to repay advance payments of the employee retention credit that they may have received.
Are you enrolled in our Individual Tax Year-End Workshop this December or January? If you are not already registered, it’s time to enroll, so you’ll be fully prepared! Register here.