Note:

Employers who reduced deposits were not subject to FTD penalties if (1) the employer was a person to whom premiums were payable; (2) the amount of employment taxes that the employer did not timely deposit (after reduction for other credits) was less than or equal to the amount of the employer’s anticipated COBRA premium assistance credit for the calendar quarter as of the time of the required deposit; and (3) the employer did not seek payment of an advance credit by filing Form 7200 with respect to the anticipated credits it relied upon to reduce its deposits.

Employers could request an advance by filing Form 7200 if the anticipated COBRA premium assistance credit exceeds the available reduction in deposits.

For Form 941, Employer's QUARTERLY Federal Tax Return, tax periods 202106, 202109, 202112, and 202203 the COBRA premium assistance credit can be a non-refundable credit, a refundable credit, or both, depending on the amount of the COBRA premium credit that can be claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported. See the table below for information regarding the application of the COBRA Premium Assistance Credit on Form 941:

Form

How Credit is Reported

Application of Credit

941

The nonrefundable portion of the credit was reported on line 11e and, if applicable, the refundable portion of the credit was reported on line 13f. If the taxpayer claimed this credit, they must also have reported the number of individuals provided COBRA premium assistance on line 11f. The refundable portion of the credit posted as a TC 766 CRN 276.

The taxpayer should not have included any amount that was included as qualified wages for the employee retention credit or included as qualified health plan expenses allocable to qualified sick leave and family leave wages when determining the nonrefundable credit. The refundable portion of the credit was allowed after the employer share of Medicare tax was reduced to zero by nonrefundable credits that were applied against the employer share of Medicare tax.

For Form 943, Employer's Annual Tax Return for Agricultural Employees, Form 944 and, Employer's ANNUAL Federal Tax Return, Form CT-1, Employer's Annual Railroad Retirement Tax Return, tax periods 202112 and 202212, the COBRA premium assistance credit could have been a non-refundable credit, a refundable credit, or both, depending on the amount of the COBRA premium credit that was claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported.

For more information on the COBRA Premium Assistance Credit and how it is claimed, see IRM 21.7.2.7.6.4, Form 94XX — COBRA Premium Assistance Credit. For information on how to adjust the credit, see IRM 21.7.2.7.6.5, Form 94XX — Adjustments When the Number of CRN and IRN Corrections Exceed Command Code ADJ54 Input Limitations.