Notice 2021-24: Penalty relief, reduced federal employment tax deposits in anticipation of tax credits

Notice 2021-24: Penalty relief

The IRS today released an advance version of Notice 2021-24 to amplify prior penalty relief provided by the IRS with regard to employers’ deposits of federal employment taxes—including deposits of withheld income taxes and employment taxes—that are reduced in anticipation of tax credits under legislation enacted to address the coronavirus (COVID-19) pandemic.

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The IRS in late March 2020 issued Notice 2020-22 to provide penalty relief for an employer’s failure to timely deposit employment taxes. Read TaxNewsFlash

Notice 2021-24 [PDF 110 KB] released today extends the penalty relief provided by Notice 2020-22 to apply to deposits of employment taxes reduced in anticipation of the following credits:

  • Paid sick and family leave credits under the Families First Coronavirus Response Act (Pub. L. No. 116-127) as amended by the COVID-related Tax Relief Act of 2020 (a division of the Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260)) with respect to qualified leave wages paid for the period beginning January 1, 2021, and ending March 31, 2021
  • Paid sick and family leave credits under sections 3131, 3132, and 3133 of the Code, added by the American Rescue Plan Act of 2021 (Pub. L. No. 117-2) with respect to qualified leave wages paid for the period beginning April 1, 2021, and ending September 30, 2021
  • The employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136) as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (a division of the Consolidated Appropriations Act, 2021) with respect to qualified wages paid for the period beginning January 1, 2021, and ending June 30, 2021
  • The employee retention credit under section 3134, added to the Code by the American Rescue Plan Act of 2021, with respect to qualified wages paid for the period beginning July 1, 2021, and ending December 31, 2021
  • The credit for Continuation Coverage Premium Assistance under section 6432, added to the Code by the American Rescue Plan Act of 2021, for COBRA continuation coverage premiums not paid by assistance-eligible individuals for such coverage during the period beginning April 1, 2021, and ending September 30, 2021

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