New IRS Guidance on ERC Repayment for Q4 2021

In response to changes to the Employee Retention Credit contained in the recently-enacted Infrastructure Investment and Jobs Act, the IRS has released new guidance for employers who need to repay ERC credits taken in Q4 2021. The guidance applies to companies who do not qualify as “startup recovery businesses” and provides direction for repayment in one of two ways, depending on how the credit was taken:

1. If the credit was taken by filing Form 7200 (advance payment) in the 4th quarter, then the credit will be repaid with the Form 941, by the due date of that form. The amount will be included on the form and a payment will be due.
2. If the credit was taken by reducing payroll tax deposits in the 4th quarter, then a deposit of these amounts is required to be remitted on or before the relevant due date for wages on December 31, 2021. A company cannot wait until filing the 941 to remit these payments and avoid a penalty.

Details of the guidance are outlined in detail in the IRS’s new Notice 2021-65, and relevant form instructions are currently being updated. If you have any questions or need further assistance with this matter, please contact your Weiss tax professional.