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IRS Extends Employment Tax Deposit Relief For Virus Credits

By Theresa Schliep · April 13, 2021, 6:24 PM EDT

The Internal Revenue Service on Tuesday extended guidance that relieves employers of penalties for failing to remit employment taxes that would be offset by paid coronavirus leave or employee retention tax credits

Employers that reduce their employment tax deposits with the IRS to account for paid sick and family leave tax credits and the employee retention tax credit will not be liable for penalties under Internal Revenue Code Section 6656 , the agency said in a notice. That provision normally penalizes employers that fail to deposit employment taxes with the agency, according to the notice, which extended relief originally issued by the IRS in March 2020. 

The American Rescue Plan Act , signed by President Joe Biden in March, allows employers to claim paid sick leave and paid family leave credits through 2021 and extends and expands the employee retention tax credit for wages paid through the end of the year. Those tax provisions were originally authorized by the Families First Coronavirus Response Act and Coronavirus Aid, Relief and Economic Security Act , which passed in 2020 and created the credits to help businesses keep employees on payroll and provide paid leave during the coronavirus pandemic.

--Editing by Robert Rudinger. 

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