Notice 2021-42

Subsequent to the March 13, 2020, emergency declaration issued by the President of the United States under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) (42 U.S.C. 5121 et seq.) in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic, the President issued major disaster declarations under the authority of the Stafford Act for each of the 50 states, the District of Columbia, and five U.S. territories (affected geographic areas). ¹

Notice 2020-46, 2020-27 I.R.B. 7, provided guidance under the Internal Revenue Code (Code) on the federal income and employment tax treatment to employers and their employees of cash payments made before January 1, 2021, for the relief of victims of the COVID-19 pandemic in the affected geographic areas under employer sponsored leave-based donation programs. Under leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in exchange for cash payments made by their employers to charitable organizations described in section 170(c) of the Code (section 170(c) organizations).

Because of the ongoing nature of the COVID-19 pandemic, the Department of the Treasury and the Internal Revenue Service have determined that it is appropriate to extend the treatment provided in Notice 2020-46 to cash payments made to section 170(c) organizations after December 31, 2020, and before January 1, 2022.

Accordingly, this notice extends the federal income and employment tax treatment provided in Notice 2020-46 to cash payments made to section 170(c) organizations after December 31, 2020, and be

Bulletin No. 2021–29 19 July 19, 2021

tronically due to tax return preparation software and return processing parameters that do not accept $0 AGI entries. Because tax returns filed on paper do not pose this processing issue, the procedure provided by section 5 of this revenue procedure does not apply to a Federal income tax return filed on paper, although the procedure provided by section 4 of this revenue procedure does apply to paper-filed returns of individuals who are not required to file a Federal income tax return for taxable year 2020. .04 The procedures provided by this revenue procedure do not apply to a resident of American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Commonwealth of Puerto Rico (Puerto Rico), or the U.S. Virgin Islands (each, a U.S. territory). A resident of a U.S. territory other than Puerto Rico should contact his or her local territory tax agency for additional information about the child tax credit and advance child tax credit payments. A resident of Puerto Rico may be eligible to claim the child tax credit from the Internal Revenue Service (IRS), under procedures to be announced at a later date, but is not eligible to receive advance child tax credit payments. A resident of a U.S. territory should contact his or her local territory tax agency for additional information about third-round economic impact payments, the 2020 recovery rebate credit, and the additional 2020 recovery rebate credit.

.05 An individual who already filed a Federal income tax return for taxable year 2020 does not need to file any additional forms or otherwise contact the IRS to (i) receive advance child tax credit payments for each eligible qualifying child, as defined in § 24(c) (2020 CTC qualifying child) shown on that return; (ii) receive a third-round economic impact payment for themselves and for each eligible dependent (as defined in § 152) shown on that return; or (iii) claim a previously claimed 2020 recovery rebate credit and additional 2020 recovery rebate credit for themselves and for each eligible 2020 CTC qualifying child.

.06 An individual who filed a Federal income tax return for taxable year 2019, including by entering information into the “Non-Filers: Enter Payment Info Here” tool in 2020, does not need to file any

additional forms or otherwise contact the IRS to receive an advance child tax credit payment for the 2020 CTC qualifying children shown on that return or to receive a third-round economic impact payment for themselves and for each dependent shown on that return. Such individual can claim the 2020 recovery rebate credit and additional 2020 recovery rebate credit on a Federal income tax return for taxable year 2020 if the individual did not receive the full amount of these credits as first- and second-round economic impact payments.