How can you, as a qualifying employer, file in advance to receive refundable tax credits? The FFCRA created an opportunity for businesses, including staffing firms, to adjust their tax payments.
Form 7200 allows employers to receive tax credits in advance for qualified sick and family leave and employee retention tax credits. Here is a link to Form 7200: Form 7200 (March 2020)
If your firm pays qualified sick and family leave wages or qualified wages eligible for the employee retention credit, you should retain an amount of the employment taxes equal to the amount of qualified sick and family leave wages. You can also keep certain related health plan expenses and your share of the Medicare taxes on qualified leave wages and your employee retention credit, instead of depositing these amounts with the IRS.
The employment taxes that are available for the credits include withheld federal income tax, the employee share of social security and Medicare taxes, and your share of social security and Medicare taxes for all employees. If there aren’t enough employment taxes to cover the cost of qualified sick and family leave wages and the employee retention credit, you can file Form 7200 to request an advance payment from the IRS.
Don’t reduce your deposits and request advance credit payments for the same expected credit. Reconcile your advance credit payments and reduced deposits on your employment tax return.
The employer tax credits for qualified sick leave wages and qualified family leave wages apply to those wages paid for the period from April 1, 2020, to December 31, 2020.
The employer tax credit for qualified wages for retention of employees during suspension of operations due to a government order or due to a significant decline in gross receipts (less than 50% of same calendar quarter in 2019 and ends with the quarter where receipts were more than 80%) applies to those wages paid after March 12, 2020, and before January 1, 2021.
File Form 7200 for an advance payment for a quarter at any time before the end of the month following the quarter in which you paid the qualified wages. You can file Form 7200 several times during each quarter.
Don’t file Form 7200 after you file Form 941 for the fourth quarter of 2020. Don’t file the form to request an advance payment for any anticipated credit for which you already reduced your deposits.
Fax your completed Form 7200 to 855-248-0552.
Additional relief information that may allow employers to delay deposit of certain employment taxes, can be found at IRS.gov/Coronavirus.
Lynn Connor, COATS Staffing Software
COATS Staffing Software clients can run a custom program created last week to assist users with completing Form 7200. COATS provides an all-in-one recruiting software to handle every aspect of your hiring process, including taxes.
COATS STAFFING SOFTWARE can be reached at 1-800-888-5894.