Penalty for failure to deposit taxes under CARES Act (Chief Counsel legal advice memo)
Penalties that may apply to a failure to deposit employment taxes that were deferred in 2020 pursuant to CARES Act section 2302
Penalties that may apply to a failure to deposit employment taxes that were deferred
The IRS today publicly released a legal advice memorandum* (from the Office of the Chief Council)—PMTA-2021-07 [PDF 131 KB] (dated June 21, 2021)—regarding penalties that may apply to a failure to deposit employment taxes that were deferred in 2020 pursuant to CARES Act section 2302. As discussed in that memorandum, the section 6656 failure to deposit penalty for employment taxes deferred under the CARES Act will apply to the entire deferred amount if any portion of the deposit (now due in December 2021 and December 2022) is delinquent. Read TaxNewsFlash
Organizations that took advantage of the CARES Act opportunity to defer payment of payroll taxes in 2020 will soon owe the first installment of those deferred taxes—it is due on December 31, 2021 – and they should take great care to make sure that the payment is on time. As explained in a recently issued Chief Counsel memorandum, because the CARES Act deferral was conditioned on timely payments of deferred amounts in 2021 and 2022, if either of those payments is late, then the entire deferral will be invalidated, the whole amount deferred will be considered late, and late payment penalties will apply.
*Legal advice memoranda are signed by executives in the National Office of the Office of Chief Counsel and issued to Internal Revenue Service personnel who are national program executives and managers. The memos are issued to assist IRS personnel in administering their programs by providing authoritative legal opinions on certain matters, such as industry-wide issues. The memos cannot be used or cited as precedent.
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