Can you file an amended return for employee retention credit?

Taxpayers can still apply for the employee retention credit on amended returns, an IRS lawyer said on Saturday. According to the IRS, employers can still apply for the Employee Retention Credit (ERC) by filing amended employment tax returns, even though the coronavirus pandemic (COVID-19) era tax credit intended to help employers and employees during the health crisis expired last year. Eligible employers generally applied for the ERC by stating their total qualified wages and related health insurance costs for each quarter on their forms 941 (employer's quarterly federal tax return). To account for tax credits related to COVID-19, such as the ERC, the IRS had to review Form 941 (and other forms in the 941 series) several times.

The IRS also reviewed Form 941-X (Employer Adjusted Quarterly Federal Tax Return or Request for Refund). According to the instructions in Form 941-X, employers can correct the overreported taxes on a previously filed Form 941 if Form 941-X is filed within three years of the date Form 941 was filed or two years after the date you paid the tax declared on Form 941, whichever occurs later. The instructions also say that employers can correct unreported taxes on a previously filed Form 941 if Form 941-X is filed three years after the date Form 941 was filed. The IRS refers to these time frames as a period of limitations.

And, for the purposes of the statute of limitations, forms 941 for a calendar year are considered filed on April 15 of the following year if they were filed before that date. This is because the opportunity to modify payroll tax overpayments has not yet expired relative to the period of time the ERC was available. Therefore, if an employer currently discovers that it was eligible for the ERC when the credit was available, it would file a Form 941-X to declare the overpayment of payroll taxes and, ultimately, apply for the ERC after its end date. Each eligible employer will declare their employee retention credit on their payroll tax return (or on the payroll tax return of their third payer) regardless of their accrual with other entities such as a single employer in order to determine their eligibility for the credit.

While the Employee Retention Tax Credit (ERTC) program has officially expired, this does not affect a company's ability to apply for the ERTC retroactively. The tool is free and is still active for employers to use and see if they can qualify for this credit. The instructions in Form 7200, Prepayment of Employer Credits Due to COVID-19, provide information on who can correctly sign a Form 7200 for each type of entity. Also, remember that if a customer has applied for a PPP loan and will be forgiven for it, they may now be eligible for the retention credit for employees with certain salaries.

To help speed up and ensure the proper processing of Form 7200 and to reconcile the prepayment of credits with the payroll tax return for the calendar quarter, only third payers who file a payroll tax return on behalf of an employer using the name and EIN of the third party payer should appear on Form 7200. An eligible employer can obtain Form 7200, Prepayment of Employer Credits Due to COVID-19, online and can fax their completed form to 855-248-0552. Chittenden advises clients on issues related to the mobile workforce, including state income tax withholding for mobile employees and taxes and reporting for expatriates and expatriates. The notice includes guidance on how employers who received a PPP loan can retroactively apply for the employee retention tax credit. Employers also declare any qualifying wages for sick leave and qualifying family leave for which they are entitled to a credit under the FFCRA on Form 941.

Because quarterly employment tax returns are not filed until after qualifying wages have been paid, some eligible employers may not have sufficient federal employment taxes set aside for filing with the IRS by reducing the amount to be deposited, particularly after taking into account the employer-allowed deferral of the portion of the social security tax under section 2302. of the CARES Act. Dyson advises large employers on the application of payroll taxes, the special FICA tax calendar rules for unqualified deferred compensation, the voluntary correction of payroll tax errors, and the reduction of penalties for late filing and reporting for a reasonable cause. Form 941 is used to declare income and social security and Medicare taxes withheld by the employer from employee salaries, as well as the employer's participation in social security and Medicare taxes.

To help accelerate and ensure the proper processing of Form 7200 and the reconciliation of the prepayment of credits with the employment tax return when an employer uses an outside payer, such as a CPEO agent, PEO, or other agent of section 3504, for only a portion of its workforce, a common law employer must include the name and EIN of the third payer only on Form 7200 for the prepayment of credits for salaries paid by the third payer and declared in the third-party payer's payroll tax return. . .