Change Country

Tax & Assurance Guidance

IRS Guidance: Retroactive ERC Termination

Posted on December 16, 2021 by

Sarah Russell

Sarah Russell

Share This

The IRS provided much-awaited guidance regarding penalty waivers for taxpayers who qualified for Employee Retention Credits (ERC) and did not remit payroll taxes before the credit was retroactively terminated after September 30.

Repayment of Advance Payments for the ERC

The IRS stated that employers who received advance payments of the ERC for wages paid in the 4th quarter of 2021 will avoid tax penalties if employers repay those amounts by the due date of their applicable employment tax returns.

Safe Harbor for Reduced Employment Tax Deposits

For employment tax deposits due on or before December 20, 2021 for wages paid between October 1, 2021 and January 1, 2022, an employer will not be subject to the failure to deposit penalty if:

  1. The employer reduced its deposits in anticipation of the ERC
  2. The employer deposits the amounts initially retained in anticipation of the ERC on or before the relevant due date for wages paid on December 31, 2021
  3. The employer reports the tax liability resulting from the termination of the ERC on the applicable employment tax return or schedule that includes the period from October 1, 2021 through December 31, 2021

Employers who do not qualify for the safe harbor relief and receive a notice of penalty from the IRS should respond to the notice with a reasonable cause explanation of why they failed to deposit such employment taxes. For more information, please contact us.

Share This

Sarah Russell

Shareholder

As the leader of the firm's tax group, Sarah supports growth-driven domestic and international businesses with tax planning, consulting and compliance.

Related Insights

Tax & Assurance Guidance

New Corporate Transparency Act Reporting Requirements

Posted on September 30, 2022 by

Sue Tuson
Learn about the new Corporate Transparency Act reporting requirements that go into effect on January 1, 2024, including beneficial owners, company applicants, exempt entities and due dates.

Tax & Assurance Guidance

Keeping Up With Digital Taxes

Posted on September 6, 2022 by

Miroslav Georgiev
Sue Tuson
To the uninitiated, selling digital products and services can seem like a much easier business model than selling physical goods. While there may be advantages to skipping inventory and warehouse needs, the digital tax landscape can be tricky to navigate. 

Tax & Assurance Guidance

Insights from Washington: Inflation Reduction Act Signed

Posted on August 19, 2022 by

Sarah Russell
On August 7, 2022, the U.S. Senate approved the Inflation Reduction Act of 2022, a bill to finance climate and energy provisions and an extension of the enhanced Affordable Care Act (ACA) subsidies totaling $369 billion in additional spending.

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content