Amendments
2018—Subsec. (d). Pub. L. 115–141, § 401(b)(34), struck out subsec. (d) which provided for a special exemption for certain individuals hired in 2010.
Subsec. (e)(5)(B). Pub. L. 115–141, § 401(a)(208), substituted “has the meaning” for “has meaning”.
2015—Subsec. (f). Pub. L. 114–113 added subsec. (f).
2014—Subsec. (a). Pub. L. 113–295, § 221(a)(99)(B)(i), substituted “6.2 percent of the wages (as defined in section 3121(a)) paid by the employer with respect to employment (as defined in section 3121(b)).” for “the following percentages of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b))—” and table of rates.
Subsec. (b). Pub. L. 113–295, § 221(a)(99)(B)(ii), substituted “1.45 percent of the wages (as defined in section 3121(a)) paid by the employer with respect to employment (as defined in section 3121(b)).” for “the following percentages of the wages (as defined in section 3121(a)) paid by him with respect to employment (as defined in section 3121(b))—
“(1) with respect to wages paid during the calendar years 1974 through 1977, the rate shall be 0.90 percent;
“(2) with respect to wages paid during the calendar year 1978, the rate shall be 1.00 percent;
“(3) with respect to wages paid during the calendar years 1979 and 1980, the rate shall be 1.05 percent;
“(4) with respect to wages paid during the calendar years 1981 through 1984, the rate shall be 1.30 percent;
“(5) with respect to wages paid during the calendar year 1985, the rate shall be 1.35 percent; and
“(6) with respect to wages paid after December 31, 1985, the rate shall be 1.45 percent.”
2011—Subsec. (e). Pub. L. 112–56 added subsec. (e).
2010—Subsec. (d). Pub. L. 111–147 added subsec. (d).
2004—Subsec. (c). Pub. L. 108–203 substituted “exclusively to the laws applicable to” for “to taxes or contributions for similar purposes under”.
1988—Subsecs. (a), (b). Pub. L. 100–647 made technical correction to directory language of Pub. L. 100–203, § 9006(b)(1), see 1987 Amendment note below.
1987—Subsecs. (a), (b). Pub. L. 100–203, as amended by Pub. L. 100–647, struck out “and (t)” after “3121(a)” in introductory provisions.
1983—Subsec. (a). Pub. L. 98–21 substituted table of rates for pars. (1) to (7) which had imposed a tax on every employer (1) with respect to wages paid during the calendar years 1974 through 1977 at the rate of 4.95 percent, (2) with respect to wages paid during the calendar year 1978 at the rate of 5.05 percent, (3) with respect to wages paid during the calendar years 1979 and 1980 at the rate of 5.08 percent, (4) with respect to wages paid during the calendar year 1981 at the rate of 5.35 percent, (5) with respect to wages paid during the calendar years 1982 through 1984 at the rate of 5.40 percent, (6) with respect to wages paid during the calendar years 1985 through 1989 at the rate of 5.70 percent, and (7) with respect to wages paid after Dec. 31, 1989, at the rate of 6.20 percent.
1977—Subsec. (a). Pub. L. 95–216, §§ 101(a)(2), 315(b), substituted “(as defined in section 3121(a) and (t))” for “(as defined in section 3121(a))” in provisions preceding par. (1), substituted “1974 through 1977” for “1974 through 2010” in par. (1), substituted “wages paid during the calendar year 1978, the rate shall be 5.05 percent” for “wages paid after December 31, 2010, the rate shall be 5.95 percent” in par. (2), and added pars. (3) to (7).
Subsec. (b). Pub. L. 95–216, §§ 101(b)(2), 315(b), substituted “(as defined in section 3121(a) and (t))” for “(as defined in section 3121(a))” in provisions preceding par. (1), substituted “wages paid during the calendar year 1978, the rate shall be 1.00 percent” for “wages paid during the calendar years 1978 through 1980, the rate shall be 1.10 percent”, in par. (2), substituted “wages paid during the calendar years 1979 and 1980, the rate shall be 1.05 percent” for wages paid during the calendar years 1981 through 1985, the rate shall be 1.35 percent” in par. (3), substituted “wages paid during the calendar years 1981 through 1984, the rate shall be 1.30 percent” for “wages paid after December 31, 1985, the rate shall be 1.50 percent” in par. (4), and added pars. (5) and (6).
Subsec. (c). Pub. L. 95–216, § 317(b)(2), added subsec. (c).
1976—Subsec. (a). Pub. L. 94–455, § 1903(a)(1)(A), redesignated pars. (5) and (6) as (1) and (2). Former pars. (1) to (4), which related to a tax rate of 3.8 percent with respect to wages received during the taxable year 1968, a tax rate of 4.2 percent with respect to wages received during the calendar year 1969 and 1970, a tax rate of 4.6 percent with respect to wages received during the calendar years 1971 and 1972, and a tax rate of 4.85 percent with respect to wages received during the calendar year 1973, respectively, were struck out.
Subsec. (b). Pub. L. 94–455, § 1903(a)(1)(B), redesignated pars. (3) to (6) as (1) to (4), respectively. Former pars. (1) and (2), which related to a tax rate of .60 percent with respect to wages received during the calendar years 1968, 1969, 1970, 1971, and 1972 and a tax rate of 1.0 percent with respect to wages received during the calendar year 1973, respectively, were struck out.
1973—Subsec. (a)(4). Pub. L. 93–233, § 6(a)(2), struck out provision for application of 4.85 percent rate of tax during calendar years 1974, 1975, 1976, and 1977.
Subsec. (a)(5). Pub. L. 93–233, § 6(a)(2), increased rate of tax from 4.80 percent to 4.95 percent and substituted calendar year “1974” to “1978” as initial year for application of such rate.
Subsec. (a)(6). Pub. L. 93–233, § 6(a)(2), increased rate of tax from 5.85 percent to 5.95 percent.
Subsec. (b)(2). Pub. L. 93–233, § 6(b)(3), struck out provision for application of 1.0 percent rate of tax during calendar years 1974, 1975, 1976, and 1977.
Subsec. (b)(3). Pub. L. 93–233, § 6(b)(3), incorporated former provision of par. (2) for taxation of wages received during calendar years 1974, 1975, 1976, and 1977, decreased the applicable rate of tax from 1.0 percent to 0.90 percent, and struck out provision for 1.25 percent rate of tax for calendar years 1978, 1979, and 1980.
Subsec. (b)(4). Pub. L. 93–233, § 6(b)(3), incorporated former provision of par. (3) for taxation of wages received during calendar years 1978, 1979, and 1980, decreased the applicable rate of tax from 1.25 percent to 1.10 percent, and struck out provision for 1.35 percent rate of tax for calendar years 1981, 1982, 1983, 1984, and 1985.
Subsec. (b)(5). Pub. L. 93–233, § 6(b)(3), incorporated former provision of par. (4) for taxation of wages received during calendar years 1981 through 1985 at applicable 1.35 percent rate of tax and struck out provision for 1.45 percent rate of tax for wages received after Dec. 31, 1985.
Subsec. (b)(6). Pub. L. 93–233, § 6(b)(3), incorporated former provision of par. (5) for taxation of wages received after Dec. 31, 1985 and increased the applicable rate of tax from 1.45 percent to 1.50 percent.
1972—Subsec. (a)(3). Pub. L. 92–603, § 135(a)(3)(A), substituted “the calendar years 1971 and 1972” for “any of the calendar years 1971 through 1977”.
Subsec. (a)(3) to (5). Pub. L. 92–336, § 204(a)(3), substituted “any of the calendar years 1971 through 1977” for “the calendar years 1971 and 1972” in par. (3), “any of the calendar years 1978 through 2010” for “the calendar years 1973, 1974, and 1975” and “4.5” for “5.0” in par. (4), and “December 31, 2010” for “December 31, 1975” and “5.35” for “5.15” in par. (5).
Subsec. (a)(4). Pub. L. 92–603, § 135(a)(3)(B), substituted “received during the calendar years 1973, 1974, 1975, 1976, and 1977, the rate shall be 4.85 percent;” for “received during any of the calendar years 1978 through 2010, the rate shall be 4.5 percent; and”.
Subsec. (a)(5). Pub. L. 92–603, § 135(a)(3)(B), substituted “received during the calendar years 1978 through 2010, the rate shall be 4.80 percent; and” for “received after December 31, 2010, the rate shall be 5.35 percent”.
Subsec. (a)(6). Pub. L. 92–603, § 135(a)(3)(B), added par. (6).
Subsec. (b)(2). Pub. L. 92–603, § 135(b)(3), increased rate to 1.0 percent from 0.9 percent.
Subsec. (b)(2) to (5). Pub. L. 92–336, § 204(b)(3), inserted references to 1976 and 1977 and substituted “0.9” for “0.65” in par. (2), substituted references for the calendar years 1978 through 1985 for references to the calendar years 1976 through 1979 and substituted “1.0” for “0.70” in par. (3), substituted references for the calendar years 1986 through 1992 for references to the calendars 1980 through 1986 and substituted “1.1” for “0.80” in par. (4), and substituted “1992” and “1986” and “1.2” for “0.9” in par. (5).
Subsec. (b)(3). Pub. L. 92–603, § 135(b)(3), substituted “and 1980, the rate shall be 1.25 percent” for “1980, 1981, 1982, 1983, 1984, and 1985, the rate shall be 1.0 percent”.
Subsec. (b)(4). Pub. L. 92–603, § 135(b)(3), substituted “1981, 1982, 1983, 1984, and 1985, the rate shall be 1.35 percent” for “1986, 1987, 1988, 1989, 1990, 1991, and 1992, the rate shall be 1.1 percent”.
Subsec. (b)(5). Pub. L. 92–603, § 135(b)(3), substituted “1985, the rate shall be 1.45 percent” for “1992, the rate shall be 1.2 percent”.
1971—Subsec. (a)(4). Pub. L. 92–5 substituted “with respect to wages paid during the calendar years 1973, 1974, and 1975, the rate shall be 5.0 percent; and” for “with respect to wages paid after December 31, 1972, the rate shall be 5.0 percent”.
Subsec. (a)(5). Pub. L. 92–5 added par. (5).
1968—Subsec. (a)(1) to (4). Pub. L. 90–248, § 109(a)(3), substituted “1968” and “3.8” for “1966” and “3.85” in par. (1) and “1969 and 1970” and “4.2” for “1967 and 1968” and “3.9” in par. (2), struck out reference to calendar years 1969 and 1970 from par. (3) and substituted therein “4.6” for “4.4”, and substituted “5.0” for “4.85” in par. (4).
Subsecs. (b)(1) to (5). Pub. L. 90–248, § 109(b)(3), struck out par. (1) provision for employer rate of 0.35 percent of wages paid with respect to employment during calendar year 1966, redesignated pars. (2) to (6) as (1) to (5), struck out reference to “1967” in such par. (1) and increased the rate by 0.10 percent to 0.60, 0.65, 0.70, 0.80, and 0.90 in pars. (1) to (5), respectively.
1965—Pub. L. 89–97, § 321(c), divided the total excise tax imposed under the entire section upon employers through a tax equal to percentages of wages paid by him into two separate taxes by dividing the section into subsecs. (a) and (b), with subsec. (a) reflecting the tax for old-age, survivors, and disability insurance, and subsec. (b) reflecting the tax for hospital insurance, but, in the case of subsec. (b), without regard to the provisions of section 3121(b)(9) insofar as it relates to employees; increased from 4⅛ percent to 4.20 percent the rate of total tax imposed by the entire section upon wages paid during calendar year 1966 (resulting from a tax of 3.85 percent under subsec. (a) and 0.35 percent under subsec. (b)), increased from 4⅛ percent to 4.40 percent the rate of total tax imposed by the entire section upon wages paid during calendar year 1967 (resulting from a tax of 3.9 percent under subsec. (a) and 0.50 percent under subsec. (b)), reduced from 4⅝ percent to 4.40 percent the rate of total tax imposed by the entire section upon wages paid during calendar year 1968 (resulting from a tax of 3.9 percent under subsec. (a) and 0.50 percent under subsec. (b)), increased from 4⅝ percent to 4.90 percent the rate of total tax imposed by the entire section upon wages paid during the calendar years 1969, 1970, 1971, and 1972 (resulting from a tax of 4.4 percent under subsec. (a) and 0.50 percent under subsec. (b)), increased from 4⅝ percent to 5.40 percent the rate for calendar years 1973, 1974, and 1975 (resulting from a tax of 4.85 percent under subsec. (a) and 0.55 percent under subsec. (b)), increased from 4⅝ percent to 5.45 percent the rate for calendar years 1976, 1977, 1978, and 1979 (resulting from a tax of 4.85 percent under subsec. (a) and 0.60 percent under subsec. (b)), increased from 4⅝ percent to 5.55 percent the rate for calendar years 1980 through 1986 (resulting from a tax of 4.85 percent under subsec. (a) and 0.70 percent under subsec. (b)), and increased the rate from 4⅝ percent to 5.65 percent for calendar years after December 31, 1986 (resulting from a tax of 4.85 percent under subsec. (a) and 0.80 percent under subsec. (b)).
Subsec. (b). Pub. L. 89–97, § 111(c)(6), struck out “, but without regard to the provisions of paragraph (9) thereof insofar as it relates to employees” after “as defined in section 3121(b)”.
1961—Pub. L. 87–64 increased rate of tax for calendar year 1962 from 3 to 3⅛ percent, calendar years 1963 to 1965, inclusive, from 3½ to 3⅝ percent, calendar years 1966 and 1967 from 4 to 4⅛ percent, calendar year 1968 from 4 to 4⅝ percent, and for calendar years after December 31, 1968, from 4½ to 4⅝ percent.
1958—Pub. L. 85–840 increased rate of tax by substituting provisions imposing a tax of 2½ percent for calendar year 1959, 3 percent for calendar years 1960–62, 3½ percent for calendar years 1963–65, 4 percent for calendar years 1966–68, and 4½ percent for calendar years beginning after Dec. 31, 1968, for provisions which imposed a tax of 2¼ percent for calendar years 1957–59, 2¾ percent for calendar years 1960–64, 3¼ percent for calendar years 1965–69, 3¾ percent for calendar years 1970–74, and 4¼ percent for calendar years beginning after Dec. 31, 1974.
1956—Act Aug. 1, 1956, increased rate of tax with respect to wages paid during calendar years 1957 to 1959, and for all calendar years thereafter, by one-quarter percent.
1954—Act Sept. 1, 1954, increased 3¼ percent rate of tax for calendar year 1970 and subsequent years to 3½ percent for calendar years 1970 to 1974 and 4 percent for 1975 and subsequent years.
Employee Retention Credit for Employers Subject to Closure Due to COVID–19
Pub. L. 116–136, div. A, title II, § 2301, Mar. 27, 2020, 134 Stat. 347, as amended by Pub. L. 116–260, div. EE, title II, §§ 206(a), (b), (c)(2), (d), 207(a)–(j), title III, § 303(d)(3)(C)(iii), Dec. 27, 2020, 134 Stat. 3059–3065, 3077, provided that:
“(a) In General.—
In the case of an eligible employer, there shall be allowed as a credit against applicable
employment taxes for each calendar quarter an amount equal to 70 percent of the qualified
wages with respect to each
employee of such employer for such calendar quarter.
“(b) Limitations and Refundability.—
“(1) Wages taken into account.—
The amount of qualified
wages with respect to any
employee which may be taken into account under subsection (a) by the eligible employer for any calendar quarter shall not exceed $10,000.
“(2) Credit limited to employment taxes.—
The credit allowed by subsection (a) with respect to any calendar quarter shall not exceed the applicable
employment taxes (reduced by any credits allowed under subsections (e) and (f) of section 3111 of the
Internal Revenue Code of 1986, sections 7001 and 7003 of the Families First Coronavirus Response Act [
Pub. L. 116–127, set out as notes below], and section 303(d) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 [div. EE of
Pub. L. 116–260,
134 Stat. 3076, in part amending this note and provisions set out as notes under this section; see Tables for classification]) on the
wages paid with respect to the
employment of all the
employees of the eligible employer for such calendar quarter.
“(3) Refundability of excess credit.—
“(A) In general.—
If the amount of the credit under subsection (a) exceeds the limitation of paragraph (2) for any calendar quarter, such excess shall be treated as an overpayment that shall be refunded under sections 6402(a) and 6413(b) of the
Internal Revenue Code of 1986.
“(B) Treatment of payments.—
For purposes of
section 1324 of title 31,
United States Code, any amounts due to the employer under this paragraph shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.
“(c) Definitions.—For purposes of this section—
“(1) Applicable employment taxes.—The term ‘applicable employment taxes’ means the following:
“(B)
So much of the taxes imposed under section 3221(a) of such Code as are attributable to the rate in effect under section 3111(a) of such Code.
“(2) Eligible employer.—
“(A) In general.—The term ‘eligible employer’ means any employer—
“(i)
which was carrying on a trade or business during the calendar quarter for which the credit is determined under subsection (a), and
“(ii) with respect to any calendar quarter, for which—
“(I)
the operation of the trade or business described in clause (i) is fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease 2019 (COVID–19), or
“(II)
the gross receipts (within the meaning of section 448(c) of the
Internal Revenue Code of 1986) of such employer for such calendar quarter are less than 80 percent of the gross receipts of such employer for the same calendar quarter in calendar year 2019.
With respect to any employer for any calendar quarter, if such employer was not in existence as of the beginning of the same calendar quarter in calendar year 2019, clause (ii)(II) shall be applied by substituting “2020” for “2019”.
“(B) Election to use alternative quarter.—At the election of the employer—
“(i) subparagraph (A)(ii)(II) shall be applied—
“(I)
by substituting ‘for the immediately preceding calendar quarter’ for ‘for such calendar quarter’, and
“(II)
by substituting ‘the corresponding calendar quarter in calendar year 2019’ for ‘the same calendar quarter in calendar year 2019’, and
“(ii)
the last sentence of subparagraph (A) shall be applied by substituting ‘the corresponding calendar quarter in calendar year 2019’ for ‘the same calendar quarter in calendar year 2019’.
An election under this subparagraph shall be made at such time and in such manner as the Secretary shall prescribe.
“(C) Tax-exempt organizations.—In the case of an organization which is described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code—
“(i)
clauses (i) and (ii)(I) of subparagraph (A) shall apply to all operations of such organization, and
“(ii)
any reference in this section to gross receipts shall be treated as a reference to gross receipts within the meaning of section 6033 of such Code.
“(3) Qualified wages.—
“(A) In general.—The term ‘qualified wages’ means—
“(i)
in the case of an eligible employer for which the average number of full-time
employees (within the meaning of section 4980H of the
Internal Revenue Code of 1986) employed by such eligible employer during 2019 was greater than 500,
wages paid by such eligible employer with respect to which an
employee is not providing services due to circumstances described in subclause (I) or (II) of paragraph (2)(A)(ii), or
“(ii) in the case of an eligible employer for which the average number of full-time employees (within the meaning of section 4980H of the Internal Revenue Code of 1986) employed by such eligible employer during 2019 was not greater than 500—
“(I)
with respect to an eligible employer described in subclause (I) of paragraph (2)(A)(ii),
wages paid by such eligible employer with respect to an
employee during any period described in such clause, or
“(II)
with respect to an eligible employer described in subclause (II) of such paragraph,
wages paid by such eligible employer with respect to an
employee during such quarter.
“(B) Exception.—
The term ‘qualified
wages’ shall not include any
wages taken into account under section 7001 or section 7003 of the Families First Coronavirus Response Act.
“(4) Secretary.—
The term ‘Secretary’ means the Secretary of the Treasury or the Secretary’s delegate.
“(5) Wages.—
“(A) In general.—
The term ‘
wages’ means
wages (as defined in section 3121(a) of the
Internal Revenue Code of 1986) and compensation (as defined in section 3231(e) of such Code). For purposes of the preceding sentence, in the case of any organization or entity described in subsection (f)(2),
wages as defined in section 3121(a) of the
Internal Revenue Code of 1986 shall be determined without regard to paragraphs (5), (6), (7), (10), and (13) of section 3121(b) of such Code (except with respect to services performed in a penal institution by an inmate thereof).
“(B) Allowance for certain health plan expenses.—
“(i) In general.—
Such term shall include amounts paid by the eligible employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the
Internal Revenue Code of 1986), but only to the extent that such amounts are excluded from the gross income of
employees by reason of section 106(a) of such Code.
“(ii) Allocation rules.—
For purposes of this section, amounts treated as
wages under clause (i) shall be treated as paid with respect to any
employee (and with respect to any period) to the extent that such amounts are properly allocable to such
employee (and to such period) in such manner as the Secretary may prescribe. Except as otherwise provided by the Secretary, such allocation shall be treated as properly made if made on the basis of being pro rata among periods of coverage.
“(6) Other terms.—
Any term used in this section which is also used in chapter 21 or 22 of the
Internal Revenue Code of 1986 shall have the same meaning as when used in such chapter.
“(d) Aggregation Rule.—
All persons treated as a single employer under subsection (a) or (b) of section 52 of the
Internal Revenue Code of 1986, or subsection (m) or (o) of section 414 of such Code, shall be treated as one employer for purposes of this section.
“(e) Certain Rules to Apply.—
For purposes of this section, rules similar to the rules of sections 51(i)(1) and 280C(a) of the
Internal Revenue Code of 1986 shall apply.
“(f) Certain Governmental Employers.—
“(1) In general.—
This credit shall not apply to the Government of the
United States, the government of any
State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.
“(2) Exception.—Paragraph (1) shall not apply to—
“(A)
any organization described in section 501(c)(1) of the
Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, or
“(B) any entity described in paragraph (1) if —
“(i)
such entity is a college or university, or
“(ii)
the principal purpose or function of such entity is providing medical or hospital care.
In the case of any entity described in subparagraph (B), such entity shall be treated as satisfying the requirements of subsection (c)(2)(A)(i).
“(g) Election to Not Take Certain Wages Into Account.—
“(1) In general.—
This section shall not apply to so much of the qualified
wages paid by an eligible employer as such employer elects (at such time and in such manner as the Secretary may prescribe) to not take into account for purposes of this section.
“(2) Coordination with paycheck protection program.—
The Secretary, in consultation with the Administrator of the
Small Business Administration, shall issue guidance providing that payroll costs paid during the covered period shall not fail to be treated as qualified
wages under this section by reason of an election under paragraph (1) to the extent that a covered loan of the eligible employer is not forgiven by reason of a decision under section 7A(g) of the
Small Business Act [
15 U.S.C. 636m(g)] or the application of section 7(a)(37)(J) of the
Small Business Act [
15 U.S.C. 636(a)(37)(J)]. Terms used in the preceding sentence which are also used in section 7A(g) or 7(a)(37)(J) of the
Small Business Act shall, when applied in connection with either such section, have the same meaning as when used in such section, respectively.
“(h) Special Rules.—
“(1) Denial of double benefit.—
Any
wages taken into account in determining the credit allowed under this section shall not be taken into account as
wages for purposes of sections 41, 45A, 45P, 45S, 51, and 1396 of the
Internal Revenue Code of 1986.
“(2) Third party payors.—
Any credit allowed under this section shall be treated as a credit described in section 3511(d)(2) of such Code.
“(i) Transfers to Federal Old-Age and Survivors Insurance Trust Fund.—
There are hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the
Social Security Act (
42 U.S.C. 401) and the Social Security Equivalent Benefit Account established under section 15A(a) of the
Railroad Retirement Act of 1974 (
45 U.S.C. 14 [sic] 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of this section (without regard to this subsection). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund or Account had this section not been enacted.
“(j) Advance Payments.—
“(1) In general.—
Except as provided in paragraph (2), no advance payment of the credit under subsection (a) shall be allowed.
“(2) Advance payments to small employers.—
“(A) In general.—
Under rules provided by the Secretary, an eligible employer for which the average number of full-time
employees (within the meaning of section 4980H of the
Internal Revenue Code of 1986) employed by such eligible employer during 2019 was not greater than 500 may elect for any calendar quarter to receive an advance payment of the credit under subsection (a) for such quarter in an amount not to exceed 70 percent of the average quarterly
wages paid by the employer in calendar year 2019.
“(B) Special rule for seasonal employers.—
In the case of any employer who employs seasonal workers (as defined in section 45R(d)(5)(B) of the
Internal Revenue Code of 1986), the employer may elect to substitute ‘the
wages for the calendar quarter in 2019 which corresponds to the calendar quarter to which the election relates’ for ‘the average quarterly
wages paid by the employer in calendar year 2019’.
“(C) Special rule for employers not in existence in 2019.—
In the case of any employer that was not in existence in 2019, subparagraphs (A) and (B) shall each be applied by substituting ‘2020’ for ‘2019’ each place it appears.
“(3) Reconciliation of credit with advance payments.—
“(A) In general.—
The amount of credit which would (but for this subsection) be allowed under this section shall be reduced (but not below zero) by the aggregate payment allowed to the taxpayer under paragraph (2). Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1) of the
Internal Revenue Code of 1986.
“(B) Excess advance payments.—
If the advance payments to a taxpayer under paragraph (2) for a calendar quarter exceed the credit allowed by this section (determined without regard to subparagraph (A)), the tax imposed by chapter 21 or 22 of the
Internal Revenue Code of 1986 (whichever is applicable) for the calendar quarter shall be increased by the amount of such excess.
“(k) Treatment of Deposits.—
The Secretary shall waive any penalty under section 6656 of the
Internal Revenue Code of 1986 for any failure to make a deposit of any applicable
employment taxes if the Secretary determines that such failure was due to the reasonable anticipation of the credit allowed under this section.
“(l) Regulations and Guidance.—The Secretary shall issue such forms, instructions, regulations, and guidance as are necessary—
“(1)
to allow the advance payment of the credit under subsection (a) as provided in subsection (j)(2), subject to the limitations provided in this section, based on such information as the Secretary shall require,
“(2)
with respect to the application of the credit under subsection (a) to third party payors (including professional employer organizations, certified professional employer organizations, or agents under section 3504 of the
Internal Revenue Code of 1986), including regulations or guidance allowing such payors to submit documentation necessary to substantiate the eligible employer status of employers that use such payors, and
“(3)
to prevent the avoidance of the purposes of the limitations under this section, including through the leaseback of
employees.
Any forms, instructions, regulations, or guidance described in paragraph (2) shall require the customer to be responsible for the accounting of the credit and for any liability for improperly claimed credits and shall require the certified professional employer organization or other third party payor to accurately report such tax credits based on the information provided by the customer.
“(m) Application.—
This section shall only apply to
wages paid after
March 12, 2020, and before
July 1, 2021.
“(n) Public Awareness Campaign.—
“(1) In general.—
The Secretary shall conduct a public awareness campaign, in coordination with the Administrator of the Small Business Administration, to provide information regarding the availability of the credit allowed under this section.
“(2) Outreach.—Under the campaign conducted under paragraph (1), the Secretary shall—
“(A)
provide to all employers which reported not more than 500
employees on the most recently filed return of applicable
employment taxes a notice about the credit allowed under this section and the requirements for eligibility to claim the credit, and
“(B)
not later than 30 days after the date of the enactment of this subsection, provide to all employers educational materials relating to the credit allowed under this section, including specific materials for businesses with not more than 500
employees.”
[Pub. L. 116–260, div. EE, title II, § 206(e), Dec. 27, 2020, 134 Stat. 3061, provided that:
[“(1) In general.—The amendments made by this section [amending section 2301 of Pub. L. 116–136, set out above] shall take effect as if included in the provisions of the CARES Act [Pub. L. 116–136] to which they relate.
[“(2) Special rule.—
[“(A) In general.—For purposes of section 2301 of the CARES Act, an employer who has filed a return of tax with respect to applicable employment taxes (as defined in section 2301(c)(1) of division A of such Act) before the date of the enactment of this Act [Dec. 27, 2020] may elect (in such manner as the Secretary of the Treasury (or the Secretary’s delegate) shall prescribe) to treat any applicable amount as an amount paid in the calendar quarter which includes the date of the enactment of this Act.
[“(B) Applicable amount.—For purposes of subparagraph (A), the term ‘applicable amount’ means the amount of wages which—
[“(i) are—
[“(I) described in section 2301(c)(5)(B) of the CARES Act, as added by the amendments made by subsection (b), or
[“(II) permitted to be treated as qualified wages under guidance issued pursuant to section 2301(g)(2) of the CARES Act (as added by subsection (c)), and
[“(ii) were—
[“(I) paid in a calendar quarter beginning after December 31, 2019, and before October 1, 2020, and
[“(II) not taken into account by the taxpayer in calculating the credit allowed under section 2301(a) of division A of such Act for such calendar quarter.”]
[Pub. L. 116–260, div. EE, title II, § 207(k), Dec. 27, 2020, 134 Stat. 3065, provided that:
“The amendments made by this section [amending
section 2301 of Pub. L. 116–136, set out above] shall apply to calendar quarters beginning after
December 31, 2020.”
]
