28 April 2020 EY webcast polling results show that close to half of participants are already taking advantage of COVID-19 federal incentives During our webcast, COVID-19: payroll and employment tax considerations, that aired on April 20, 2020, we asked participants through polling questions the extent to which they are already reducing their federal employment tax deposits pursuant to the COVID-19 refundable tax credits and the Social Security tax payment deferral option under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Employers with 500 or more employees comprised 75% of the polling participants. Pursuant to the CARES Act option to defer payment of the employer portion of Social Security tax, with 50% to be repaid by December 31, 2021 and the remainder by December 31, 2022, 44% said that they have started reducing their federal employment tax deposits in the 2020 first quarter. Pursuant to the paid leave refundable tax credits under the Families First Coronavirus Response Act (FFCRA) and the employee retention tax credit under the CARES Act, 56% said that they have started reducing their federal employment tax deposits in the 2020 first quarter. The complexity involved in coordinating the various federal COVID-19 employer incentives and accurately interpreting the requirements is reflected by the 30% of polling participants who responded that they foresee needing the advice of tax advisor to implement the COVID-19 refundable tax credits and/or the Social Security deferral option. Although the option to defer payment of the employer's share of Social Security tax is effective with payments that would otherwise be required to be made during the period beginning on March 27, 2020, and ending December 31, 2020, the Form 941, Employer's QUARTERLY Federal Tax Return, will not be revised to reflect the deferral option (or the FFCRA paid-leave and CARES Act employee-retention credits) until the second quarter covering the period April 1 to June 30, 2020. As of April 27, 2020, the IRS has not issued detailed guidance concerning the mechanics of Form 941 reporting and reconciliation steps the IRS will take. For example, it is not yet clear if employers that reduced their federal employment tax deposits in the 2020 first quarter in anticipation of the COVID-19 federal incentives will be required to file a Form 941-X when the modified Form 941/941-X comes available. View our special report, COVID-19, employer requirements and considerations Download the April 20, 2020 slide deck.
Document ID: 2020-1137 | |||||||||||
