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IRS News Release: Penalty Relief Available for Reduced Employee Retention Credit Due to Return Processing Delays (IRC §3134)

April 18, 2022, 5:00 AM

Penalty relief is available when additional income tax is owed because the deduction for qualified wages is reduced by the amount of a retroactively claimed employee retention tax credit (ERTC), but the taxpayer is unable to pay the additional income tax because the ERTC refund payment has not yet been received, the IRS announced in a reminder to taxpayers and practitioners. The situation may arise, in part, due to the IRS’s backlog in processing adjusted employment tax returns (e.g., Form 941-X) on which the taxpayers claim ERTC retroactively, the IRS acknowledged. Consistent with the relief from penalties for failure to ...