IRS Provides Relief from Penalty for Failure to Deposit Employment Taxes

 – March 31, 2020
IRS Provides Relief from Penalty for Failure to Deposit Employment Taxes

Notice 2020-22 provides a waiver of additions to tax for failure to make a deposit of taxes for employers required to pay qualified sick leave wages and qualified family leave wages mandated by the Families First Coronavirus Response Act (Families First Act) and qualified health plan expenses allocable to these wages.  

This notice also provides a waiver of additions to tax for failure to make a deposit of taxes for certain employers subject to a full or partial closure order due to the coronavirus disease 2019 (COVID-19) or experiencing a statutorily specified decline in business under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  

This notice applies to deposits of employment taxes (including withheld income taxes, taxes under the Federal Insurance Contributions Act and taxes under the Railroad Retirement Act) reduced in anticipation of the credits with respect to qualified sick leave wages and qualified family leave wages paid with respect to the period beginning April 1, 2020, and ending Dec. 31, 2020.  

This notice applies with respect to deposits of employment taxes reduced in anticipation of the credits with respect to qualified wages paid with respect to the period beginning on March 13, 2020, and ending Dec. 31, 2020.

This relief ensures that such employers may pay qualified sick leave wages and qualified family leave wages required by the Families First Act or qualified wages under the CARES Act using employment taxes that would otherwise be required to be deposited without incurring a failure to deposit penalty.