On Friday, March 20, the IRS issued a news release providing employers with initial guidance on payroll tax credits made available by the Families First Coronavirus Response Act (FFCRA). We previously covered the FFCRA here. The guidance includes several key takeaways:
- Businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes.
- Payroll taxes that employees may retain include Social Security, Medicare and federal income taxes withheld on an employee’s behalf.
- If retained taxes are less than the amount of the tax credit, then the IRS will issue accelerated refunds (IRS indicates this should take less than two weeks).
- The Department of Labor will be issuing a non-enforcement policy that provides a period of time for employers to come into compliance.
The IRS intends to issue additional guidance this week, including a “streamlined claim form.”