Note:

The taxpayer was not subject to federal tax deposit penalties for retaining eligible deposits/payments as outlined in (a) above provided the employer did not also seek payment of an advance by filing a timely Form 7200 in 2020 or 2021 for the same credit amount that was used to reduce deposits (an employer could not avoid penalties by reducing deposits and seeking an advance for the same amount). In order to avoid FTD penalties, employers must also have paid Qualified Retention Wages to their employees during the relevant period.

Form 7200, Advance Payment of Employer Credit Due to COVID-19 was created to request advanced payment of the tax credits for, and the Employee Retention Credit, in addition to the credits for qualified sick and family leave wages, and the COBRA Premium Assistance Credit claimed on Forms 941, 941(sp), 941-SS, 943, 943(sp), and CT-1.