Erroneous COVID-19 credits subject to recapture

Tax Hot Topics newsletter The IRS recently issued proposed (REG-111879-20) and temporary (TD 9904) regulations that would treat erroneous refunds or credits made to employers in connection with credits for qualified leave wages under the Families First Coronavirus Response Act (FFCRA) or the employee retention credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act as an underpayment of payroll taxes subject to assessment and administrative collection procedures. The guidance would also apply to any third-party payors of an employer, such as agents and professional employer organizations. The proposed and temporary regulations would be applicable for all credit refunds under the FFCRA advanced or paid on or after April 1, 2020, and all credit refunds under the CARES Act advanced or paid on or after March 13, 2020.

Jeff Martin
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
+1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
+1 202 861 4107

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