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IRS Offers Leniency for Employee Retention Tax Perk (Correct)

Dec. 6, 2021, 7:20 PMUpdated: Dec. 20, 2021, 8:39 PM

The IRS is offering leniency to businesses that expected to claim a pandemic-relief tax credit to keep employees on their payroll—if rules are followed.

The IRS released guidance (Notice 2021-65) covering the earlier-than-expected end of the employee retention tax credit, a Covid-19 relief measure that Congress sunset three months early in the recently enacted infrastructure law.

The guidance released Monday details how businesses that received advanced payments can return the money and when. It also explains how businesses that reduced payroll tax deposits in anticipation of receiving the credit can avoid penalties. The infrastructure law retroactively changed the ...