IRS Relief for Small Business

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The IRS (Internal Revenue Service) is offering penalty relief for any employer that fails to deposit employment taxes with the IRS by the correct date.

In Notice 2021-24, the IRS intensified prior guidance from 2020. The new notice offers relief for employers who are required to pay eligible sick leave wages and qualified family leave wages, along with qualified health plan expenses that can be allocated to those wages, as mandated by the Families First Coronavirus Response Act, which was amended by the COVID-related Tax Relief Act of 2020, along with the American Rescue Plan Act of 2021.

The IRS guidance targets to help businesses who were hurt by the COVID-19 pandemic through the coronavirus relief packages passed by Congress since last year, including the CARES Act, the Consolidated Appropriations Act, and most recently the American Rescue Plan Act. The guidance helps employers benefit from some of the tax credits available to them under those laws — such as for paid sick leave, family leave, and the Employee Retention Credit — while they continue to pay employees during the pandemic with some of the payroll taxes they otherwise would have needed to deposit with the IRS.

The notice also offers relief for some employers for whom COBRA continuation coverage premiums weren’t paid by former employees who were eligible for assistance with coverage under the American Rescue Plan Act.

In a statement from the IRS, “This relief ensures that such employers may pay qualified sick leave wages and qualified family leaves wages, qualified wages, and COBRA continuation coverage premiums using Employment Taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty.”

The assistance also provides some relief for employers who experienced a full or partial closure order due to COVID-19 or who suffered a decline in business.

Overall, many businesses will experience a plethora of benefits from the IRS’s new guidance and the various coronavirus relief packages passed by Congress.

As always feel free to reach out to us so that we can make sure you are the best positioned on all of the above. Feel free to reach out to us and let’s set up a time for a review – call us at SWVA Tax & Accounting at 540-250-3198.