How to get money fast for paid leave and employee retention credits - Spidell

How to get money fast for paid leave and employee retention credits

The IRS has provided two different procedures to get money into employers’ hands quickly who are claiming credits for paid sick or family leave benefits or employee retention credits. Employers may claim credits against their 6.2% OASDI taxes for:

  • 100% of their employer-paid sick leave and employer-paid family leave benefits paid under the Families First Coronavirus Response Act (FFCRA) to qualified employees for leave taken after March 31, 2020, through December 31, 2020; and
  • The new Employer Retention Credit of 50% of qualified wages paid to employees, up to a $5,000 maximum credit for wages paid after March 12, 2020, and before December 31, 2020.

Rather than wait weeks after the employer has filed its quarterly Form 941, the IRS has set up two alternative ways employers can cash in these credits quickly:

  • They can retain the following employment taxes rather than depositing them:
    • Federal income taxes withheld for all employees;
    • The employee’s share of Social Security and Medicare taxes (but only for the employee who received the paid benefits or qualified wages); and
    • The employer’s share of Social Security and Medicare taxes for all employees; or
  • Alternatively, employers may file Form 7200, Advance Payment of Employer Credits Due to COVID-19, to expedite a refund of the credit due in excess of the amount of previously retained employment taxes. The IRS has stated that they will try to issue refunds within two weeks.

Form 7200 may be filed for an advance payment of the credits anticipated for a quarter at any time before the end of the month following the quarter in which the employer paid the qualified wages. If necessary, it can be filed several times during each quarter.

Submit Form 7200 by faxing it to (855) 248-0552.

Form 7200 is available at:

FTB’s Practitioner Hotline and call center still open

We received a post on our message board the other day that a practitioner couldn’t access the FTB by phone. Because many FTB employees are working at home, access is not as convenient as usual. Here is what the FTB has posted to their website:

“Due to the State directive of social distancing, we have a limited number of staff available for phone and chat services. If you cannot get through our phone lines, please try to contact us later. You can also use our website for more information and online service options.”

Sign up for Spidell’s CARES Act for Tax Pros Webinar and get details on how the stimulus payments work, find out how to help your clients take advantage of Payroll Protection loans, and more. Click here and register today!