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July 16, 2020
2020-1812

IRS is now sending letters to businesses experiencing delays with advance payment of COVID-19 employer tax credits

The IRS announced that employers experiencing a delay in the processing of their Form 7200, Advance Payment of Employer Credits Due To COVID-19 will begin receiving letters explaining the cause.

Form 7200 is used to request advance payment of the credits allowed under the Families First Coronavirus Response Act for qualified payments of sick and family leave and/or the Coronavirus Aid, Relief, and Economic Security (CARES) Act employee retention credit. (See EY Tax Alert 2020-0815.)

The two letters the IRS is sending

There are two letters the IRS will send in connection with Form 7200 processing delays as follows:

  • Letter 6312 will be sent if the IRS either rejected Form 7200 or made a change to the requested amount of advance payment due to a computation error. The letter will explain the reason for the rejection or, if the amount is adjusted, the new payment amount will be listed on the letter.
  • Letter 6313 will be sent if the IRS needs written verification from a taxpayer that the address listed on the Form 7200 is the current mailing address for its business. The IRS will not process Form 7200 or change the last known address until the taxpayer provides it.

Ernst & Young LLP insights

It is important that businesses filing Forms 7200 have a process in place for being promptly aware of letters the IRS may have sent concerning delays. Keep in mind that failure to timely respond to these letters could further postpone receipt of payment and potentially trigger notices involving employment tax credits reported on Form 941.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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