EMPLOYMENT TAX

REG-111879-20, page 421. Temporary and proposed regulations provide guidance on the recapture of excess employment tax credits. Under the Families First Coronavirus Response Act and Coronavirus Aid, Relief and Economic Security Act, eligible employers may claim refundable paid sick and family leave and employee retention credits up to the total allowable amounts either on their employment tax returns or as an advance payment that is later reconciled on their employment tax returns. Any refund of these credits paid to a taxpayer that exceeds the credit amount the taxpayer is allowed is an erroneous refund. These temporary regulations authorize the assessment and collection of any erroneous refund of the credits in the normal course of processing the applicable employment tax returns. This allows the IRS to efficiently recover any refund, while preserving administrative protections for taxpayers.

T.D. 9904, page 413. Temporary and proposed regulations provide guidance on the recapture of excess employment tax credits. Under the Families First Coronavirus Response Act and Coronavirus Aid, Relief and Economic Security Act, eligible employers may claim refundable paid sick and family leave and employee retention credits up to the total allowable amounts either on their employment tax returns or as an advance payment that is later reconciled on their employment tax returns. Any refund of these credits paid to a taxpayer that exceeds the credit amount the taxpayer is allowed is an erroneous refund. These temporary regulations authorize the assessment and collection of any erroneous refund of the

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credits in the normal course of processing the applicable employment tax returns. This allows the IRS to efficiently recover any refund, while preserving administrative protections for taxpayers.