SECTION 1. PURPOSE

The purpose of this notice is to provide penalty relief with respect to certain em­ ployers’ deposits of Federal employment taxes with the Internal Revenue Service (IRS) under §§ 31.6302-1 or 31.6302-2 of the Employment Taxes and Collection of Income Tax at Source Regulations, in­ cluding deposits of withheld income tax­ es, taxes under the Federal Insurance Con­ tributions Act (FICA), and taxes under the Railroad Retirement Tax Act (RRTA) (collectively, Employment Taxes). Spe­ cifically, this notice provides relief to em­ ployers entitled to the new refundable tax credits provided under the Families First Coronavirus Response Act (Families First Act), Public Law No. 116-127 (March 18, 2020), and the Coronavirus Aid, Re­ lief, and Economic Security Act (CARES Act), Public Law No. 116-136 (March 27, 2020). Employers paying qualified sick leave wages and qualified family leave wages required by the Families First Act (collec­ tively, Qualified Leave Wages), as well as qualified health plan expenses allocable to Qualified Leave Wages (Qualified Health Plan Expenses) are eligible for refundable tax credits under the Families First Act. Additionally, certain employers experi­ encing a full or partial business suspen­ sion due to orders from a governmental authority due to the coronavirus disease 2019 (COVID-19) or experiencing a statu­ torily specified decline in business are also allowed a refundable tax credit under the CARES Act of up to fifty percent of the qualified wages, including allocable qualified health expenses and limited to $10,000 per employee over all calendar quarters combined (Qualified Retention Wages). Under the Families First Act and the CARES Act, an employer paying Qualified Leave Wages or Qualified Re­

tention Wages may take refundable tax credits against a specified portion of the employer’s share of certain Employment Taxes.

Section 3 of this notice provides em­ ployers relief from the failure to depos­ it penalty imposed by section 6656 of the Internal Revenue Code (Code) for an employer’s failure to timely depos­ it Employment Taxes to the extent that the amounts not deposited are equal to or less than the amount of refundable tax credits to which the employer is en­ titled under the Families First Act and the CARES Act. This relief ensures that such employers may pay Qualified Leave Wages required by the Families First Act or Qualified Retention Wages under the CARES Act using Employment Taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty. This notice applies to deposits of Employment Taxes reduced in anticipation of the credits with respect to Qualified Leave Wages paid with re­ spect to the period beginning April 1, 2020, and ending December 31, 2020, and in anticipation of the credits with re­ spect to Qualified Retention Wages paid with respect to the period beginning on March 13, 2020, and ending December 31, 2020.