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CARES Act Payroll Tax Forum: IRS Weighs in on High-Profile Employee Retention Tax Credits

Decisions aimed at preserving your workforce in response to the COVID-19 pandemic can have a long-term impact on your business. As you prepare to emerge from government shutdown orders, recall that your workforce is your single most valuable asset.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides employee retention tax credits to help employers defray the cost of keeping their workforces intact in the post-COVID business environment. At the same time, taking advantage of these credits requires careful, upfront planning, particularly in light of the recent FAQs issued by the IRS.

During our interactive discussion, we will address the critical matters that you need to understand when planning for these credits, including:

  • What constitutes a partial suspension of business operations, and how government shutdown orders impact those suspensions under the FAQs
  • Which types of compensation and benefits are considered “qualified wages” under the FAQs, including the treatment of health expenses
  • How the FAQs differ from the Joint Committee on Taxation Bluebook
  • How aggregation rules can defeat or enable an employer’s qualification to qualify for employee retention tax credits
  • What you should do to claim and report the credits on IRS quarterly tax reporting forms
  • Which employment law matters you should consider before taking employee retention tax credits

Have an (anonymous) question that you would like us to answer? Be sure to submit it via the registration link.

Wednesday, May 6, 2020

11:00 am – 12:00 pm PDT
12:00 pm – 1:00 pm MDT
1:00 pm – 2:00 pm CDT
2:00 pm – 3:00 pm EDT

Register now.




View From McDermott: Conduct Regular Reviews to Ensure Compliance with FICA Tax Withholding Rules

Sponsors of nonqualified deferred compensation plans should pay close attention to the special tax withholding rules under the Federal Insurance Contributions Act (FICA) to avoid paying interest and penalties, and potentially being sued by plan participants. FICA tax on nonqualified deferred compensation must be withheld when compensation vests, not later when actually paid out. Failure to withhold FICA tax at the time of vesting will cause the compensation plus any earnings to be subject to FICA tax later as it is distributed to the participant, potentially resulting in higher overall FICA taxes for both the employer and the participant. As shown by the case of Davidson v. Henkel, employees may even successfully sue the employer for causing them to receive lower benefits due to the higher tax burden created by a failure to follow the correct withholding rules.

This article explores the common FICA and Additional Medicare Tax withholding errors and the potential remedies that may be available to employers who fail to timely withhold FICA and/or Additional Medicare Tax on nonqualified deferred compensation.

Read the full article.




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