21 May New Version of Form 7200 Needed to File for Second Quarter 2021 Credits
The IRS is asking employers to wait until the newest version of Form 7200 (Advance Payment of Employer Credits Due to COVID-19) is available before submitting it for the second quarter of 2021 because the existing January 2021 version of the form was not designed for claiming coronavirus (COVID-19) tax credits after the first quarter of 2021.
In response to COVID-19, the federal government enacted legislation such as the employee retention credit (ERC) and paid sick and family leave credits to help employers. In March of 2020, the IRS issued Form 7200 so that employers could receive payment of these credits in advance. The IRS revised Form 7200 in January 2021 after the Consolidated Appropriations Act, 2021 (CAA) was signed into law because this legislation extended the ERC and paid sick and family leave tax credits.
On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law. This act further extends the ERC and paid sick and family leave tax credits. ARPA also added a new COBRA premium assistance credit. However, the IRS has yet to issue a revised Form 7200 to be used for these credits, beginning with the second quarter 2021.
The IRS is therefore asking employers not to use the existing Form 7200 to file for the second, third, or fourth quarter credits of 2021 since they will reject those filings. The IRS has said that the new version of the form will be available soon.
This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.