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IRS Issues Guidance on Excess Employment Tax Credits

Aug 06, 2020

The IRS recently issued temporary and proposed regulations on the recapture of excess employment tax credits under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The regulations cover the reconciling of advance payments of the acts’ refundable employment tax credits and authorize assessments to recapture the credits, when. Eligible employers are entitled to receive a refundable credit equal to the amount of the qualified sick leave wages and qualified family leave wages they are required to pay under the FFCRA, plus allocable qualified health plan expenses.

Subject to certain reductions for other credits, the credit is allowed against the employer’s Social Security taxes and taxes imposed on all wages and compensation paid to employees.