Under the CARES Act, certain employers are eligible for a 50% credit for wages paid to employees under certain conditions as we previously reported to you. The credit can be self-claimed from withheld payroll and income tax. The credit is for wages paid after March 12, 2020. The period from March 12, 2020, through March 31, 2020, falls into the first quarter and would normally be reported on Form 941 due in April. Yesterday, the IRS posted the following instruction on reporting the wages used for the credit paid in March 2020 on the second quarter Form 941 due in July 2020.
“The Coronavirus Aid, Relief, and Economic Security (CARES) Act supports certain employers that operate a business during 2020 and retain employees, despite experiencing economic hardship related to the COVID-19 crisis, with an employee retention credit. The refundable tax credit is equal to 50% of qualified wages paid to employees after March 12, 2020, and before January 1, 2021. If you paid any qualified wages between March 13, 2020, and March 31, 2020, inclusive, you will include 50% of those wages together with 50% of any qualified wages paid during the second quarter of 2020 on your second quarter Form 941, 941-SS, or 941-PR to claim the employee retention credit. Do not include the credit on your first quarter Form 941, 941-SS, or 941-PR.”
If you have any questions regarding this IRS instruction, please contact Sean Cook, William Lentine, Jeffrey Segal or a member of Warner’s Tax Law Practice Group.
