Recapture of Certain Excess Employment Tax Credits Under COVID-19 Legislation (rule, 88 FR 48118, July 26, 2023)
Summary
Final regulations from the Internal Revenue Service (IRS), Treasury (TD 9978), under sections 3111, 3131, 3132, 3134 and 3221 of the Internal Revenue Code. They were published in the Federal Register on July 26, 2023 (Vol. 88, No. 142) and are effective on July 24, 2023. They authorize the assessment of any erroneous refund of the COVID–19 employment tax credits: the paid leave credits under sections 7001 and 7003 of the Families First Coronavirus Response Act, the employee retention credit under section 2301 of the CARES Act, and the similar credits under the American Rescue Plan Act of 2021 (ARP). Such refunds can be assessed as an underpayment of employment taxes. The regulations finalize and remove the earlier temporary regulations. They also note that the only employer eligible for the ERC for wages paid after September 30, 2021 is a recovery startup business.
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Cite this document
“Recapture of Certain Excess Employment Tax Credits Under COVID-19 Legislation (rule, 88 FR 48118, July 26, 2023).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/recapture-of-certain-excess-employment-tax-credits-under-covid-19-legi-d7462e24cb/
, SHA-256 c052e59d455b3520c3dba87a34c706a30708b0f30af942083e2c09add07d0cb0.Full text
48118 Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations
programs, or the rights and obligations salts of isomers (Other name: 31.3131–1(d), 31.3132–1(d), 31.3134–
of recipients thereof; or (4) raise novel flualprazolam) 2785 1(d), and 31.3221–5(e).
legal or policy issues arising out of legal (59) 6-(2-chlorophenyl)-1-methyl-8- FOR FURTHER INFORMATION CONTACT:
mandates, the President’s priorities, or nitro-4H-benzo[f][1,2,4]triazolo[4,3- NaLee Park at 202–317–6798 (not a toll-
the principles set forth in the E.O. a][1,4]diazepine, its salts, isomers, and free number).
Because this is not a rulemaking action, salts of isomers (Other name: SUPPLEMENTARY INFORMATION:
this is not a significant regulatory action clonazolam) 2786
as defined in section 3(f) of E.O. 12866. (60) 8-bromo-6-(2-fluorophenyl)-1- Background
This action will not have substantial methyl-4H-benzo[f][1,2,4]triazolo[4,3- This document sets forth amendments
direct effects on the States, on the a][1,4]diazepine, its salts, isomers, and to the Employment Tax Regulations (26
relationship between the national salts of isomers (Other name: CFR part 31) under sections 3111, 3131,
government and the States, or on the flubromazolam) 2788 3132, 3133, 3134, and 3221.
distribution of power and (61) 7-chloro-5-(2-chlorophenyl)-1- The Families First Coronavirus
responsibilities among the various methyl-1,3-dihydro-2H- Response Act (Families First Act),
levels of government. Therefore, in benzo[e][1,4]diazepin-2-one, its salts, Public Law 116–127, 134 Stat. 178
accordance with E.O. 13132 isomers, and salts of isomers (Other (March 18, 2020), as amended and
(Federalism), it is determined that this name: diclazepam) 2789 extended by the COVID-related Tax
action does not have sufficient Relief Act of 2020 (Tax Relief Act),
Scott Brinks, enacted as Subtitle B of Title II of
federalism implications to warrant the
preparation of a Federalism Assessment. Federal Register Liaison Officer, Drug Division N of the Consolidated
Enforcement Administration. Appropriations Act, 2021, Public Law
Signing Authority [FR Doc. 2023–15748 Filed 7–25–23; 8:45 am] 116–260, 134 Stat.1182 (December 27,
This document of the Drug BILLING CODE 4410–09–P 2020), and the Coronavirus Aid, Relief,
Enforcement Administration was signed and Economic Security Act (CARES
on July 18, 2023, by Administrator Anne Act), Public Law 116–136, 134 Stat. 281
Milgram. That document with the DEPARTMENT OF THE TREASURY (March 27, 2020), as amended and
original signature and date is extended by the Taxpayer Certainty and
maintained by DEA. For administrative Internal Revenue Service Disaster Tax Relief Act of 2020 (Relief
purposes only, and in compliance with Act), enacted as Division EE of the
requirements of the Office of the Federal 26 CFR Part 31 Consolidated Appropriations Act, 2021,
Register, the undersigned DEA Federal [TD 9978]
provided relief to taxpayers from
Register Liaison Officer has been economic hardships resulting from the
authorized to sign and submit the RIN 1545–BQ08 Coronavirus Disease 2019 (COVID–19),
document in electronic format for including paid sick and family leave
publication, as an official document of Recapture of Certain Excess credits to eligible employers with
DEA. This administrative process in no Employment Tax Credits Under respect to qualified leave wages paid for
way alters the legal effect of this COVID–19 Legislation a period of leave taken beginning April
document upon publication in the AGENCY: Internal Revenue Service (IRS), 1, 2020, and ending March 31, 2021,
Federal Register. Treasury. and an employee retention credit (ERC)
with respect to qualified wages paid
List of Subjects in 21 CFR Part 1308 ACTION: Final regulations and removal of
after March 12, 2020, and before July 1,
Administrative practice and temporary regulations. 2021, respectively. The American
procedure, Drug traffic control, Rescue Plan Act of 2021 (ARP), Public
SUMMARY: This document sets forth the
Reporting and recordkeeping Law 117–2, 135 Stat. 4 (March 11,
final regulations under sections 3111,
requirements. 2021), provided additional COVID–19
3131, 3132, 3134, and 3221 of the
For the reasons set out above, DEA Internal Revenue Code (Code) issued relief with similar paid leave credits
amends 21 CFR part 1308 as follows: under the authority granted by the under sections 3131 through 3133 of the
Families First Coronavirus Response Code, enacted by section 9641 of the
PART 1308—SCHEDULES OF ARP, with respect to qualified leave
CONTROLLED SUBSTANCES Act, the Coronavirus Aid, Relief, and
Economic Security Act, and the wages paid for a period of leave taken
American Rescue Plan Act of 2021. beginning April 1, 2021, and ending
■ 1. The authority citation for part 1308
These final regulations authorize the September 30, 2021, and a substantially
continues to read as follows:
assessment of any erroneous refund of similar ERC under section 3134 of the
Authority: 21 U.S.C. 811, 812, 871(b), Code, enacted by section 9651 of the
956(b), unless otherwise noted. the tax credits paid under sections 7001
and 7003 of the Families First ARP, with respect to qualified wages
■ 2. In § 1308.11, add paragraphs (h)(57) Coronavirus Response Act (including paid after June 30, 2021, and before
through (h)(61) to read as follows: any increases in those credits under January 1, 2022.1
§ 1308.11 Schedule I. section 7005 thereof), and section 2301 1 Section 80604 of the Infrastructure Investment
* * * * * of the Coronavirus Aid, Relief, and and Jobs Act (Infrastructure Act), Public Law 117–
(h) * * * Economic Security Act, as well as under 68, 135 Stat. 429 (November 15, 2021) amended
(57) 4-(2-chlorophenyl)-2-ethyl-9- sections 3131, 3132 (including any section 3134(n) of the Code to provide that the ERC
increases in those credits under section under section 3134 applies only to wages paid after
methyl-6H-thieno[3,2-
lotter on DSK11XQN23PROD with RULES1
June 30, 2021, and before October 1, 2021 (or, in
f][1,2,4]triazolo[4,3-a][1,4]diazepine, its 3133), and 3134 of the Code. the case of wages paid by an eligible employer
salts, isomers, and salts of isomers DATES: which is a recovery startup business, January 1,
(Other name: etizolam) 2780 Effective date: These final regulations 2022). Therefore, the only type of employer eligible
for the ERC for wages paid after September 30,
(58) 8-chloro-6-(2-fluorophenyl)-1- are effective on July 24, 2023. 2021, and before January 1, 2022, is an employer
methyl-4H-benzo[f][1,2,4]triazolo[4,3- Applicability date: For date of that meets the definition of a recovery startup
a][1,4]diazepine, its salts, isomers, and applicability, see §§ 31.3111–6(e), business under section 3134(c)(5). See Notice 2021–
VerDate Sep<11>2014 17:11 Jul 25, 2023 Jkt 259001 PO 00000 Frm 00088 Fmt 4700 Sfmt 4700 E:\FR\FM\26JYR1.SGM 26JYR1
Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations 48119
I. Paid Sick and Family Leave Credits 2 addition, section 7005 provides that the available to eligible employers that paid
credits under sections 7001 and 7003 of qualified family leave wages to an
A. Families First Act, as Amended and
the Families First Act are increased by employee for up to 12 weeks of paid
Extended by the Tax Relief Act
the amount of the tax imposed by family leave provided during the period
The Emergency Paid Sick Leave Act section 3111(b) of the Code (employer’s beginning April 1, 2021, and ending
(EPSLA) and the Emergency Family and share of the Hospital Insurance tax September 30, 2021, if the employee
Medical Leave Expansion Act (Medicare tax)) on qualified leave was unable to work or telework due to
(EFMLEA), enacted as Divisions E and wages.3 any of the conditions for which eligible
C of the Families First Act, respectively, Although the requirement to provide employers may provide COVID-related
generally required certain employers employees with paid leave under paid sick leave. Qualified family leave
with fewer than 500 employees to EPSLA and EFMLEA expired on wages are two-thirds of the wages paid
provide up to 80 hours of paid sick December 31, 2020, the paid sick and at the employee’s regular rate of pay, up
leave for the care of the employees family leave credits were extended by to a maximum of $200 per day and
themselves or for others for certain the Tax Relief Act for qualified leave $12,000 in the aggregate.
COVID-related reasons specified in the wages paid for periods of leave taken The paid sick and family leave credits
statute, at specified daily and aggregate through March 31, 2021, that would under sections 3131 and 3132 are
rates of pay, and up to 10 weeks of paid have satisfied the requirements of allowed against the taxes imposed on
family and medical leave at two-thirds EPSLA and EFMLEA. employers under section 3111(b) and
the employee’s regular rate of pay, up to against so much of the taxes imposed
$200 per day and $10,000 in the B. ARP
under section 3221(a) as are attributable
aggregate if the employee was unable to The ARP added sections 3131 through to the rate in effect under section
work or telework because the employee 3133 of the Code, which provide 3111(b), as applicable, on all wages and
was caring for a son or daughter whose refundable paid sick and family leave compensation paid to all employees,
school or place of care was closed or credits similar to those provided under and any credit amounts in excess of
whose child care provider was the Families First Act. Sections 3131 these taxes are treated as an
unavailable due to certain through 3133 extend the paid sick and overpayment to be refunded under
circumstances related to COVID–19. family leave credits to non- sections 6402(a) and 6413(b). See
Sections 7001 and 7003 of the governmental employers with fewer sections 3131(b)(4)(A), 3131(f)(1),
Families First Act generally provide that than 500 employees and certain 3132(b)(3)(A), and 3132(f)(1).
non-governmental employers subject to governmental entities 4 without regard
the paid leave requirements under to the number of employees that II. Employee Retention Credit 5
EPSLA and EFMLEA are entitled to provided paid sick and family leave for A. CARES, as Amended and Extended
fully refundable tax credits to cover the specified reasons related to COVID–19 by the Relief Act
wages paid for leave taken for those with respect to periods of leave
periods of time between April 1, 2020, beginning on April 1, 2021, through Section 2301 of the CARES Act, as
and December 31, 2020, during which September 30, 2021. The paid sick and originally enacted, provides for the ERC
employees were unable to work or family leave credits under sections 3131 for eligible employers, including tax-
telework for specified reasons related to through 3133 are available to eligible exempt organizations, that paid
COVID–19, plus allocable qualified employers that provided employees qualified wages, including certain
health plan expenses. These paid sick with paid leave that would have health plan expenses, to some or all of
leave credits and paid family leave satisfied the requirements of EPSLA and their employees after March 12, 2020,
credits (collectively, paid sick and EFMLEA, with certain modifications and before January 1, 2021. The ERC, as
family leave credits) are allowed against made pursuant to the ARP. originally enacted, is a fully refundable
the taxes imposed on employers by Under section 3131, a credit is tax credit for employers equal to 50
section 3111(a) of the Code (the Old- available to eligible employers that paid percent of qualified wages. Section
Age, Survivors, and Disability Insurance qualified sick leave wages to an 2301(b)(1) of the CARES Act limits the
tax (social security tax)), first reduced employee for up to 80 hours of leave amount of qualified wages with respect
by any credits claimed under section provided during the period beginning to any employee that may be taken into
3111(e) and (f), and section 3221(a) (the April 1, 2021, and ending September 30, account to $10,000 for all calendar
Railroad Retirement Tax Act Tier 1 tax), 2021, if the employee was unable to quarters in 2020. Therefore, the
on all wages and compensation paid to work or telework due to any of the maximum credit amount with respect to
all employees. Under section 7005 of COVID-related reasons specified in the each employee for all four calendar
the Families First Act, the qualified statute. Under section 3132, a credit is quarters in 2020 is $5,000. For
leave wages for which the credits are employers that averaged more than 100
claimed are not subject to the taxes 3 The credit for the employer’s share of Medicare full-time employees during 2019,
imposed on employers by sections tax does not apply to eligible employers that are qualified wages are wages and
subject to the Railroad Retirement Tax Act (RRTA) compensation (including allocable
3111(a) and 3221(a) of the Code. In because under section 7005(a) of the Families First
Act, qualified leave wages are not subject to
qualified health plan expenses) paid to
65, 2021–51 IRB 880, for guidance for employers Medicare tax under RRTA due to that section’s employees who were not providing
that received an advance payment of the ERC or reference to section 3221(a) of the Code, that refers
reduced tax deposits in anticipation of the credit for to both social security tax and Medicare tax. 5 Detailed information about the ERC under the
the fourth quarter of 2021 prior to the amendments 4 Section 9641 of the ARP added sections CARES Act, as amended by the Relief Act, and
made by the Infrastructure Act. 3131(f)(5) and 3132(f)(5) to the Code that extends under the ARP is provided in TD 9904 and TD
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2 Detailed information on the paid sick leave paid sick and family leave credits to certain 9953, respectively. For more information, see
credits and paid family leave credits under the governmental employers (without regard to the Notice 2021–20, 2021–11 IRB 922, Notice 2021–23,
Families First Act, as amended by the Tax Relief number of employees). However, the credits are not 2021–16 IRB 1113, Notice 2021–24, 2021–18 IRB
Act, and under the ARP is provided in TD 9904, allowed for the government of the United States, or 1122, Notice 2021–49, 2021–34 IRB 316, and Rev.
85 FR 45514, and TD 9953, 86 FR 50637, any agency or instrumentality of the United States Proc. 2021–33, 2021–34 IRB 327. Also see the
respectively. Also see the IRS.gov website at: Government, except for an organization described IRS.gov website at: Coronavirus Tax Relief for
Coronavirus Tax Relief for Businesses and Tax- in section 501(c)(1) of the Code and exempt from Businesses and Tax-Exempt Entities/Internal
Exempt Entities √ Internal Revenue Service (irs.gov). tax under section 501(a). Revenue Service (irs.gov).
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48120 Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations
services because operations were fully each employee for any calendar quarter business in the fourth quarter of 2021,
or partially suspended due to orders in 2021 is $7,000. Additionally, the January 1, 2022).7
from an appropriate governmental threshold distinguishing small
III. Refundability of Credits
authority limiting commerce, travel, or employers from large employers for
group meetings (for commercial, social, purposes of applying certain criteria to Sections 7001(b)(4) and 7003(b)(3) of
religious, or other purposes) due to determine eligibility for the credit was the Families First Act provide that if the
COVID–19 or due to a significant increased from 100 employees to 500 amount of the paid sick and family
decline in gross receipts. For employers employees. leave credits under these sections
that averaged 100 full-time employees (including any increases in the credits
B. ARP and Infrastructure Act under section 7005) for the period of
or fewer during 2019, qualified wages
are wages and compensation (including Section 9651 of the ARP enacted leave taken from April 1, 2020 through
allocable qualified health plan section 3134 of the Code, effective for March 31, 2021, exceeds the taxes
expenses) paid to any employee during calendar quarters beginning after June imposed by section 3111(a) of the Code,
the period operations were fully or 30, 2021, to provide an ERC for first reduced by any credits claimed
partially suspended due to orders from qualified wages paid after June 30, 2021, under section 3111(e) and (f), or section
an appropriate governmental authority and before January 1, 2022. The ERC 3221(a) for any calendar quarter, the
limiting commerce, travel, or group under section 3134 is substantially excess shall be treated as an
meetings (for commercial, social, similar to the ERC under section 2301 overpayment that shall be refunded
religious, or other purposes) due to of the CARES Act, though the ARP under sections 6402(a) and 6413(b). For
COVID–19 or due to a significant made some modifications including the period after March 12, 2020, and
decline in gross receipts, regardless of expanding the definition of eligible before July 1, 2021, section 2301(b)(3) of
whether their employees were providing employer and the definition of qualified the CARES Act provides that if the
services. wages.6 Additionally, the ERC available amount of the ERC exceeds the
The ERC available under section 2301 under section 3134 of the Code for a applicable employment taxes 8 (first
of the CARES Act for a calendar quarter calendar quarter is allowed against the reduced by any credits allowed under
is allowed against the taxes imposed on taxes imposed on employers under section 3111(e) and (f) of the Code,
employers by section 3111(a) of the section 3111(b), first reduced by any sections 7001 and 7003 of the Families
Code, first reduced by any credits credits allowed under sections 3131 and First Act, and section 303(d) of the
allowed under section 3111(e) and (f) 3132, and the taxes imposed under Relief Act), the excess shall be treated
and sections 7001 and 7003 of the section 3221(a) that are attributable to as an overpayment that shall be
Families First Act, and the taxes the rate in effect under section 3111(b), refunded under sections 6402(a) and
imposed under section 3221(a) of the first reduced by any credits allowed 6413(b) of the Code.
Code that are attributable to the rate in under sections 3131 and 3132, on the With respect to the paid sick and
effect under section 3111(a), first wages and compensation paid with family leave credits and ERC enacted by
reduced by any credits allowed under respect to the employment of all the the ARP, sections 3131(b)(4)(A),
sections 7001 and 7003 of the Families employees of the eligible employer for 3132(b)(3)(A), and 3134(b)(3) of the
First Act, on the wages and that calendar quarter. Any credit Code provide that if the amount of the
compensation paid with respect to the amounts in excess of these taxes are paid sick and family leave credits under
employment of all the employees of the treated as an overpayment to be these sections (including any increases
eligible employer for that calendar refunded under sections 6402(a) and in the credits under section 3133(a)) and
quarter. 6413(b). See section 3134(b)(3), ERC exceeds the taxes imposed under
Section 2301 of the CARES Act was 3134(c)(1). section 3111(b) and so much of the taxes
subsequently amended by sections 206 The ERC is available to any employer imposed under section 3221(a) as are
and 207 of the Relief Act. Section 206 that carried on a trade or business attributable to the rate in effect under
of the Relief Act adopted retroactive during a calendar quarter between June section 3111(b), as applicable, for any
amendments and technical changes to 30, 2021, and January 1, 2022, that met calendar quarter, after application of the
section 2301 of the CARES Act for the requirements to be an eligible other credits previously applied, the
qualified wages paid after March 12, employer under section 3134(c)(2), excess shall be treated as an
2020, and before January 1, 2021, which include experiencing a full or overpayment that shall be refunded
primarily expanding eligibility for partial suspension of business under sections 6402(a) and 6413(b).
certain employers to claim the credit. operations due to orders from an Section 6402(a) generally provides
Section 207 of the Relief Act further appropriate governmental authority that, within the applicable period of
amended section 2301 of the CARES Act limiting commerce, travel, or group limitations, overpayments may be
to extend the application of the ERC to meetings (for commercial, social, credited against any liability in respect
qualified wages paid after December 31, religious, or other purposes) due to
2020, and before July 1, 2021, to modify COVID–19, experiencing a decline in
7 Employers that qualify because they are
the gross receipts test for calendar recovery startup businesses may claim the ERC for
gross receipts, or qualifying as a wages paid after September 30, 2021, and before
quarters in 2021, and to modify the recovery startup business. See Notice January 1, 2022. For more information, see Notice
calculation of the credit amount for 2021–49. Section 80604 of the 2021–65 for amendments made by the
qualified wages paid during that time. Infrastructure Act amended section Infrastructure Act. Notice 2021–65 explains the
Under section 2301 of the CARES Act, retroactive termination of the ERC and provides
3134(n) to provide that the ERC applies instructions for employers that became ineligible
as amended by section 207 of the Relief only to wages paid after June 30, 2021, and must repay any advance payment of ERC or
Act, the ERC is equal to 70 percent of seek to avoid failure to deposit penalties for the
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and before October 1, 2021 (or, in the
qualified wages. The Relief Act also case of wages paid by an eligible fourth quarter of 2021.
increased the amount of qualified wages employer that was a recovery startup
8 ‘‘Applicable employment taxes’’ are defined in
that could be taken into account per section 2301(c)(1) of the CARES Act as the taxes
imposed by section 3111(a) of the Code or so much
employee to $10,000 per employee per 6 For more information on the changes made to of the taxes imposed under section 3221(a) of the
calendar quarter in 2021. Therefore, the the ERC when section 3134 was added to the Code, Code as are attributable to the rate in effect under
maximum credit amount with respect to see Notice 2021–49. section 3111(a) of the Code.
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Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations 48121
of an Internal Revenue tax on the part IV. Advance Payment of Credits and to request an advance of the COVID–19
of the person who made the Erroneous Refunds credits.10 Employers were required to
overpayment, and any remaining Section 3606 of the CARES Act reconcile any advance payments
balance refunded to that person. Section amended sections 7001(b)(4) and claimed on Form 7200 with total credits
6413(b) provides that if more than the 7003(b)(3) of the Families First Act to claimed and total taxes due on their
correct amount of employment tax provide that, in anticipation of the paid employment tax returns, including
imposed by sections 3101, 3111, 3201, sick and family leave credits under amended tax returns.
3221, or 3402 is paid or deducted and these sections, including any refundable A refund or credit of any portion of
the overpayment cannot be adjusted portions (including any increases in the the COVID–19 credits, regardless of
under section 6413(a),9 the amount of credits under section 7005), these whether they were advanced, claimed
the overpayment shall be refunded credits may be advanced, according to by a taxpayer in excess of the amount
(subject to the applicable statute of forms and instructions provided by the to which the taxpayer is entitled is an
Secretary, up to the total allowable erroneous refund that the employer
limitations) as the Secretary may
amount and subject to applicable limits must repay.
prescribe in regulations.
for the calendar quarter. Section V. Assessment Authority
The IRS revised Form 941, Employer’s
2301(l)(1) of the CARES Act provides
Quarterly Federal Tax Return, Form that the Secretary shall issue such Section 6201 authorizes and requires
943, Employer’s Annual Federal Tax forms, instructions, regulations, and the Secretary to determine and assess
Return for Agricultural Employees, guidance as are necessary to allow the tax liabilities, including interest,
Form 944, Employer’s Annual Federal advance payment of the ERC under additional amounts, additions to the tax,
Tax Return, and Form CT–1, Employer’s section 2301, subject to the limitations and assessable penalties. The Code or
Annual Railroad Retirement Tax provided in section 2301 and based on other statutory authority provides for
Return, several times in calendar years such information as the Secretary shall the administrative recapture of certain
2020 through 2022 so that employers require. Section 2301(j)(2)(A) of the erroneous refunds of the COVID–19
could use these returns to claim the CARES Act, as amended by section credits either by directly authorizing the
paid sick and family leave credits under 207(g)(1) of the Relief Act, provides that, assessment of the erroneous refunds or
the Families First Act and under under rules provided by the Secretary, by authorizing the promulgation of
sections 3131 through 3133 of the Code eligible employers for which the average regulations or other guidance to do so.
number of full-time employees (within Specifically, with regard to paid sick
and the ERC under the CARES Act and
the meaning of section 4980H of the and family leave credits, sections
under section 3134 of the Code
Code) employed by the eligible 7001(f) and 7003(f) of the Families First
(collectively, COVID–19 credits). The
employer during 2019 was not greater Act and sections 3131(g) and 3132(g) of
revised employment tax returns allowed the Code provide, in relevant part, that
for any of these credits in excess of the than 500 may elect, for calendar
quarters in 2021, to receive an advance the Secretary will provide such
taxes imposed under section 3111(a) or regulations or other guidance as may be
3111(b), as applicable, and so much of payment of the ERC for the quarter in
an amount not to exceed 70 percent of necessary to carry out the purposes of
the taxes imposed under section 3221(a) the credits, including regulations or
as are attributable to the rate in effect the average quarterly wages paid in
calendar year 2019. other guidance to prevent the avoidance
under section 3111(a) or 3111(b), as of the purposes of the limitations under
Similarly, sections 3131(b)(4)(B) and
applicable, to be credited against other these provisions and to recapture the
3132(b)(3)(B) provide that, in
employment taxes and then for any benefit of the credit where there is a
anticipation of the paid sick and family
remaining balance to be credited or leave credits under these sections subsequent adjustment to the credit. See
refunded to the employer in accordance (including any increases in the credits sections 7001(f) and 7003(f) of the
with section 6402(a) or section 6413(b). under section 3133(a)) and any Families First Act, and sections
Form 941–X, Adjusted Employer’s refundable portions, these credits are to 3131(g)(1), 3131(g)(4), 3132(g)(1), and
Quarterly Federal Tax Return or Claim be advanced, according to forms and 3132(g)(4) of the Code.
for Refund, Form 943–X, Adjusted instructions provided by the Secretary, With regard to the ERC, section
Employer’s Annual Federal Tax Return up to the total allowable amount of the 2301(l) of the CARES Act provides in
for Agricultural Employees or Claim for credits and subject to applicable limits relevant part that the Secretary shall
Refund, Form 944, Adjusted Employer’s for the calendar quarter. Section issue such forms, instructions,
Annual Federal Tax Return or Claim for 3134(j)(2)(A) provides that, under rules regulations, and guidance as are
Refund, and Form CT–1 X, Adjusted provided by the Secretary, eligible necessary to reconcile an advance
Employer’s Annual Railroad Retirement employers for which the average payment of the ERC with the amount
Tax Return or Claim for Refund were number of full-time employees (within determined at the time of filing the
the meaning of section 4980H) employment tax return for the
also revised so that employers can use
employed by the eligible employer applicable calendar quarter or taxable
these returns to amend previous
during 2019 was not greater than 500 year. Section 2301(j)(3)(B) of the CARES
employment tax returns to adjust or
may elect, for calendar quarters in 2021, Act, as amended by section 207 of the
claim COVID–19 credits for prior Relief Act, allows for the direct
periods. to receive an advance payment of the
ERC for the quarter in an amount not to assessment of certain erroneous refunds
exceed 70 percent of the average of advanced portions of the ERC by
9 Section 6413(a) addresses interest-free
quarterly wages paid in calendar year providing that if a small eligible
adjustments of overpayments. The section provides
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that if more than the correct amount of employment 2019. employer specified in section 2301(j)(2)
tax imposed by section 3101, 3111, 3201, 3221, or To implement the advance payment of the CARES Act receives excess
3402 is paid with respect to any payment of provisions, employers that were eligible
remuneration, proper adjustments with respect to 10 Employers are no longer able to request an
both the tax and the amount to be deducted, shall
to receive an advance of the tax credits advance payment of any credit on Form 7200. The
be made, without interest, in the manner and at the used IRS Form 7200, Advance Payment advance payment of COVID–19 credits ended on
times as the Secretary may prescribe in regulations. of Employer Credits Due To COVID–19, January 31, 2022.
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48122 Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations
advance payments of the credit, then the Comments and Explanation of under section 3111(a) or 3111(b), as
taxes imposed by chapter 21 or 22 of the Provisions.’’ applicable, and are, therefore, subject to
Code (whichever is applicable) for the On September 10, 2021, temporary assessment and administrative
calendar quarter are increased by the regulations (TD 9953, 2021–39 IRB 430 collection procedures. This allows the
amount of the excess. Section 2301(l) of (September 27, 2021)) amending the IRS to prevent the avoidance of the
the CARES Act generally, as amended Employment Tax Regulations under purposes of the limitations under the
by sections 206 and 207 of the Relief sections 3131 through 3134 to provide credit provisions and to recover the
Act, further provides that the Secretary for the recapture of erroneous refunds of erroneous refund amounts efficiently
shall issue such forms, instructions, the paid sick and family leave credits while also preserving administrative
regulations, and other guidance as are and ERC under the ARP, pursuant to the protections afforded to taxpayers with
necessary to prevent the avoidance of authority granted under that act to respect to contesting their tax liabilities
the purposes of the limitations under prescribe those regulations, were under the Code and avoiding
section 2301 of the CARES Act. published in the Federal Register (86 unnecessary costs and burdens
Correspondingly, section 3134(j)(3)(B) of FR 50637). A notice of proposed associated with litigation. These
the Code allows for the direct rulemaking (REG–109077–21) cross- assessment and administrative
assessment of certain erroneous refunds referencing the temporary regulations collection procedures may apply both in
of advanced portions of the credit by was published in the Federal Register the processing of employment tax
providing that if a small eligible on the same day (86 FR 50687). The text returns and in examining returns for
employer specified in section 3134(j)(2) of the temporary regulations served as excess claimed credits. These
receives excess advance payments of the the text of the proposed regulations. No assessment and administrative
credit, then the taxes imposed under public hearing was requested or held, collection procedures are not intended
section 3111(b) or so much of the taxes and no comments were received on the to be exclusive and therefore do not
imposed under section 3221(a) as are proposed regulations. The proposed replace the existing recapture methods
attributable to the rate in effect under regulations are adopted by this Treasury but rather represent an alternative
section 3111(b), as applicable, for the decision with a minor modification, and method available to the IRS. These final
calendar quarter are increased by the the corresponding temporary regulations also provide that the
amount of the excess. Section regulations are removed. determination of any amount of credits
3134(m)(3) further provides that the Accordingly, this document amends erroneously refunded must take into
Secretary will issue such forms, the Employment Tax Regulations (26 account any credit amounts advanced to
instructions, regulations, and other CFR part 31) by finalizing the an employer under the process
guidance as are necessary to prevent the regulations under sections 3111, 3131, established by the IRS in accordance
3132, 3134, and 3221 of the Code. with sections 7001(b)(4)(A)(ii) and
avoidance of the purposes of the
limitations under section 3134. Summary of Comments and 7003(b)(3)(B) of the Families First Act,
Explanation of Revisions as modified by section 3606 of the
VI. Temporary Regulations
The Department of the Treasury CARES Act, and section 2301(l)(1) of the
On July 29, 2020, temporary (Treasury Department) and the IRS CARES Act.
regulations (TD 9904, 2020–34 IRB 413 received two comments in response to In certain circumstances, third-party
(August 17, 2020)) amending the the proposed regulations under sections payors claim tax credits on behalf of
Employment Tax Regulations under 3111 and 3221 but no comments in their common law employer clients.
sections 3111 and 3221 to provide for response to the proposed regulations These final regulations clarify that
the recapture of erroneous refunds of under sections 3131 through 3134. employers against which an erroneous
the paid sick and family leave credits Neither comment received addressed refund of credits may be assessed as an
under the Families First Act and the assessment and recapture of underpayment include persons treated
erroneous refunds of the ERC under the erroneous refunds of credits under the as the employer under sections 3401(d),
CARES Act, pursuant to the authority Families First Act and the CARES Act. 3504, and 3511, consistent with their
granted under these acts to prescribe One commenter said that the CARES liability for the employment taxes
those regulations, were published in the Act should not fund businesses that against which the credits applied. In
Federal Register (85 FR 45514). A primarily or exclusively employ non- addition, these final regulations clarify
notice of proposed rulemaking (REG– citizen and temporary visa workers. The the proposed regulations by expressly
111879–20) cross-referencing the second commenter requested that the stating that the common law employer
temporary regulations was published in Treasury Department and the IRS clients of these third-party payors that
the Federal Register on the same day consider providing additional guidance remain subject to all provisions of law
(85 FR 45551). The text of the temporary on potential reporting issues, including applicable to employers with respect to
regulations served as the text of the for certain retirement-related provisions the payment of wages or compensation,
proposed regulations. No public hearing in the CARES Act. These issues are as applicable, may also be assessed for
was requested or held. Two comments outside the scope of these regulations. an erroneous refund of credits. This
responding to the notice of proposed For this reason, these final regulations clarification makes clear to employers
rulemaking were received. All do not address these comments and what had been implicit in the proposed
comments were considered and are adopt the proposed regulations with a regulations, that the existing rules in
available for public inspection and minor modification. The corresponding sections 3504 and 3511(c) concerning
copying at https://www.regulations.gov temporary regulations are removed. the liability of common law employer
or upon request. After consideration of These final regulations provide that clients of third-party payors remain
lotter on DSK11XQN23PROD with RULES1
the comments, the proposed regulations erroneous refunds of COVID–19 credits applicable in this situation. Specifically,
are adopted by this Treasury decision are treated as underpayments of the section 3504 provides that where a
with a minor modification, and the taxes imposed under section 3111(a) or fiduciary, agent, or other person is
corresponding temporary regulations are 3111(b), as applicable, and so much of acting for an employer in performing
removed. The public comments are the taxes imposed under section 3221(a) acts required of the employer under the
discussed under ‘‘Summary of as are attributable to the rate in effect Code, ‘‘the employer for whom such
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Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations 48123
fiduciary, agent, or other person acts Therefore, a regulatory impact List of Subjects in 26 CFR Part 31
shall remain subject to the provisions of assessment is not required. Employment taxes, Fishing vessels,
law (including penalties) applicable in Pursuant to the Regulatory Flexibility
Gambling, Income taxes, Penalties,
respect of employers.’’ See also Act (5 U.S.C. chapter 6), the Secretary
Pensions, Railroad retirement, Reporting
§§ 31.3504–1(a) and 31.3504–2(c)(2). certifies that these final regulations will
and recordkeeping requirements, Social
Similarly, section 3511(c) and not have a significant economic impact
security, Unemployment compensation.
§ 31.3511–1(a)(3) provide that, for third- on a substantial number of small entities
party payors that are Certified because these final regulations impose Adoption of Amendments to the
Professional Employer Organizations no compliance burden on any business Regulations
(CPEO), an employer client of a CPEO entities, including small entities. Accordingly, 26 CFR part 31 is
is treated as an employer (and therefore Although these final regulations will amended as follows:
subject to all applicable provisions of apply to all employers eligible for the
law) for purposes of Federal employment tax credits under the PART 31—EMPLOYMENT TAXES AND
employment taxes imposed on Families First Act, the CARES Act, and COLLECTION OF INCOME TAX AT
remuneration paid by the CPEO to non- sections 3131, 3132, and 3134 of the SOURCE
worksite employees.11 While sections Code, including small businesses and
3504 and 3511 applied in the same tax-exempt organizations with fewer ■ Paragraph 1. The authority citation
manner as a matter of law under the than 500 employees, and will therefore for part 31 is amended by:
proposed regulations, the final be likely to affect a substantial number ■ a. Removing the entry for § 31.3111–
regulations expressly state these rules to of small entities, the economic impact 6T;
avoid any confusion and help will not be significant. These final ■ b. Adding an entry in numerical order
employers better understand their legal regulations do not affect the employer’s for § 31.3111–6;
responsibilities stemming from sections employment tax reporting or the ■ c. Removing the entries for
3504 and 3511. necessary information to substantiate §§ 31.3131–1T, 31.3132–1T, 31.3134–
entitlement to the credits. Rather, these 1T, and 31.3221–5T
Section 7805(b)(1)(A) and (B) of the
final regulations merely implement the ■ d. Adding entries in numerical order
Code generally provide that no
statutory authority granted under for §§ 31.3131–1, 31.3132–1, 31.3134–1.
temporary, proposed, or final regulation
sections 7001(f) and 7003(f) of the and 31.3221–5.
relating to the Internal Revenue laws
Families First Act, section 2301(l) of the The general authority and additions
may apply to any taxable period ending
CARES Act, and sections 3131(g), read, in part, as follows:
before the earliest of (A) the date on
3132(g), and 3134(m) of the Code that
which the regulation is filed with the Authority: 26 U.S.C. 7805.
authorize the IRS to assess, reconcile,
Federal Register, or (B) in the case of a Section 31.3111–6 also issued under secs.
and recapture any portion of the credits
final regulation, the date on which a 7001 and 7003, Public Law 116–127, 134
erroneously credited, paid, or refunded
proposed or temporary regulation to Stat. 178, and sec. 2301, Public Law 116–136,
in excess of the actual amount allowed
which the final regulation relates was 134 Stat. 281.
as if the amounts were taxes imposed
filed with the Federal Register. * * * * *
under section 3111(a) or 3111(b),
Consistent with the authority whichever is applicable, and so much of Section 31.3131–1 also issued under 26
provided by section 7805(b)(1)(B), U.S.C. 3131(g).
the taxes imposed under section 3221(a) Section 31.3132–1 also issued under 26
§§ 31.3111–6, 31.3131–1, 31.3132–1, as are attributable to the rate in effect
31.3134–1, and 31.3221–5 are U.S.C. 3132(g).
under section 3111(a) or 3111(b), as Section 31.3134–1 also issued under 26
applicable to credits paid on or after the applicable, subject to assessment and U.S.C. 3134(m)(3).
date on which the related proposed and administrative collection procedures. Section 31.3221–5 also issued under secs.
temporary regulations were filed with Notwithstanding this certification, the 7001 and 7003, Public Law 116–127, 134
the Federal Register. Treasury Department and the IRS did Stat. 178, and sec. 2301, Public Law 116–136,
not receive any comments on any 134 Stat. 281.
Special Analyses
impact these regulations would have on * * * * *
Pursuant to the Memorandum of small entities. ■ Par. 2. Section 31.3111–6 is added to
Agreement, Review of Treasury read as follows:
Regulations under Executive Order Statement of Availability of IRS
12866 (June 9, 2023), tax regulatory Documents § 31.3111–6 Recapture of credits under the
actions issued by the IRS are not subject IRS notices and other guidance cited Families First Coronavirus Response Act
to the requirements of section 6 of in this preamble are published in the and the Coronavirus Aid, Relief, and
Executive Order 12866, as amended. Internal Revenue Bulletin (or Economic Security Act.
Cumulative Bulletin) and are available (a) Recapture of erroneously refunded
11 Section 3511(a) provides that the CPEO is from the Superintendent of Documents, credits under the Families First
treated as the sole employer (i.e., solely subject to U.S. Government Publishing Office, Coronavirus Response Act. Any amount
all provisions of law applicable to employers) for of credits for qualified sick leave wages
purposes of Federal employment taxes imposed on
Washington, DC 20402, or by visiting
remuneration paid to worksite employees, as the IRS website at https://www.irs.gov. or qualified family leave wages under
defined in section 7705(e). Therefore, for sections 7001 and 7003, respectively, of
remuneration paid by a CPEO to worksite Drafting Information the Families First Coronavirus Response
employees, the employer client is not subject to any The principal author of these final Act (Families First Act), Public Law
provisions of law applicable to employers with
regulations is NaLee Park, Office of the 116–127, 134 Stat. 178 (2020), as
lotter on DSK11XQN23PROD with RULES1
respect to the payment of this remuneration. For
this reason, the clarification in these final Associate Chief Counsel (Employee modified by section 3606 of the
regulations concerning the assessment against Benefits, Exempt Organizations, and Coronavirus Aid, Relief, and Economic
employer clients of a third-party payor for an Employment Taxes). However, other Security Act (CARES Act), Public Law
erroneous refund of credits does not apply to
erroneous refunds of credits that were claimed
personnel from the Treasury 116–136, 134 Stat. 281 (2020), plus any
based on remuneration paid by a CPEO to worksite Department and the IRS participated in amount of credits for qualified health
employees. the development of these regulations. plan expenses under sections 7001 and
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48124 Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations
7003, and including any increases in those credits under section 7005 of the those credits under section 3133),
those credits under section 7005 of the Families First Act), as modified by advanced or paid on or after September
Families First Act, that are treated as section 3606 of the CARES Act, 8, 2021.
overpayments and refunded or credited advanced or paid on or after July 24,
to an employer under section 6402(a) or 2020, and all credit refunds under § 31.3131–1T [Removed]
6413(b) of the Internal Revenue Code section 2301 of the CARES Act ■ Par. 5. Section 31.3131–1T is
(Code) and to which the employer is not advanced or paid on or after July 24, removed.
entitled, resulting in an erroneous 2020.
refund to the employer, shall be treated ■ Par. 6. Section 31.3132–1 is added to
as an underpayment of the taxes § 31.3111–6T [Removed] read as follows:
imposed by section 3111(a) of the Code ■ Par. 3. Section 31.3111–6T is
§ 31.3132–1 Recapture of credits.
and may be assessed and collected by removed.
the Secretary in the same manner as the ■ Par. 4. Section 31.3131–1 is added to (a) Recapture of erroneously refunded
taxes. read as follows: credits. Any amount of credits for
(b) Recapture of erroneously refunded qualified family leave wages under
credits under the Coronavirus Aid, § 31.3131–1 Recapture of credits. section 3132, including any increase to
Relief, and Economic Security Act. Any (a) Recapture of erroneously refunded the amount of the credits under sections
amount of credits for qualified wages credits. Any amount of credits for 3132(d), 3132(e), and 3133, that are
under section 2301 of the CARES Act qualified sick leave wages under section treated as overpayments and refunded
that is treated as an overpayment and 3131(a), including any increase to the or credited to an employer under
refunded or credited to an employer amount of the credits under sections section 6402(a) or 6413(b) and to which
under section 6402(a) or 6413(b) of the 3131(d), 3131(e), and 3133, that are the employer is not entitled, resulting in
Code and to which the employer is not treated as overpayments and refunded an erroneous refund to the employer,
entitled, resulting in an erroneous or credited to an employer under shall be treated as an underpayment of
refund to the employer, shall be treated section 6402(a) or 6413(b) and to which the taxes imposed under section 3111(b)
as an underpayment of the taxes the employer is not entitled, resulting in and so much of the taxes imposed under
imposed by section 3111(a) of the Code an erroneous refund to the employer, section 3221(a) as are attributable to the
and may be assessed and collected by shall be treated as an underpayment of rate in effect under section 3111(b), as
the Secretary in the same manner as the the taxes imposed under section 3111(b) applicable, and may be assessed and
taxes. and so much of the taxes imposed under collected by the Secretary in the same
(c) Advance credit amounts section 3221(a) as are attributable to the manner as the taxes.
erroneously refunded. The rate in effect under section 3111(b), as (b) Advance credit amounts
determination of any amount of credits applicable, and may be assessed and erroneously refunded. The
erroneously refunded as described in collected by the Secretary in the same determination of any amount of credits
paragraphs (a) and (b) of this section manner as the taxes. erroneously refunded as described in
must take into account any amount of (b) Advance credit amounts paragraph (a) of this section must take
credits advanced to an employer under erroneously refunded. The into account any amount of credits
the process established by the Internal determination of any amount of credits advanced to an employer under the
Revenue Service in accordance with erroneously refunded as described in process established by the Internal
sections 7001(b)(4)(A)(ii) and paragraph (a) of this section must take Revenue Service in accordance with
7003(b)(3)(B) of the Families First Act, into account any amount of credits section 3132(b)(3)(B) and 3132(g)(6).
as modified by section 3606 of the advanced to an employer under the
CARES Act, and section 2301(l)(1) of the process established by the Internal (c) Third party payors. For purposes
CARES Act. Revenue Service in accordance with of this section, employers against whom
(d) Third party payors. For purposes section 3131(b)(4)(B) and 3131(g)(6). an erroneous refund of the credits under
of this section, employers against whom (c) Third party payors. For purposes section 3132 (including any increases in
an erroneous refund of the credits under of this section, employers against whom those credits under section 3133) can be
sections 7001 and 7003 of the Families an erroneous refund of the credits under assessed as an underpayment of the
First Act (including any increases in section 3131 (including any increases in taxes imposed under section 3111(b)
those credits under section 7005 of the those credits under section 3133) can be and so much of the taxes imposed under
Families First Act), as modified by assessed as an underpayment of the section 3221(a) as are attributable to the
section 3606 of the CARES Act, and the taxes imposed under section 3111(b) rate in effect under section 3111(b), as
credits under section 2301 of the CARES and so much of the taxes imposed under applicable, include persons treated as
Act can be assessed as an underpayment section 3221(a) as are attributable to the the employer under sections 3401(d),
of the taxes imposed by section 3111(a) rate in effect under section 3111(b), as 3504, and 3511, consistent with their
include persons treated as the employer applicable, include persons treated as liability for the section 3111(b) or
under sections 3401(d), 3504, and 3511 the employer under sections 3401(d), 3221(a) taxes against which the credit
of the Code, consistent with their 3504, and 3511, consistent with their applied, and also include those persons’
liability for the section 3111(a) taxes liability for the section 3111(b) or common law employer clients that
against which the credit applied, and 3221(a) taxes against which the credit remain subject to all provisions of law
also include those persons’ common law applied, and also include those persons’ applicable to employers with respect to
employer clients that remain subject to common law employer clients that the payment of wages or compensation,
all provisions of law applicable to remain subject to all provisions of law as applicable.
lotter on DSK11XQN23PROD with RULES1
employers with respect to the payment applicable to employers with respect to (d) Applicability date. This section
of wages. the payment of wages or compensation, applies to all credit refunds under
(e) Applicability date. This section as applicable. section 3132 (including any increases in
applies to all credit refunds under (d) Applicability date. This section those credits under section 3133)
sections 7001 and 7003 of the Families applies to all credit refunds under advanced or paid on or after September
First Act (including any increases in section 3131 (including any increases in 8, 2021.
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Federal Register / Vol. 88, No. 142 / Wednesday, July 26, 2023 / Rules and Regulations 48125
§ 31.3132–1T [Removed] § 31.3221–5 Recapture of credits under the include persons treated as the employer
Families First Coronavirus Response Act under sections 3401(d), 3504, and 3511
■ Par. 7. Section 31.3132–1T is and the Coronavirus Aid, Relief, and of the Code, consistent with their
removed. Economic Security Act.
liability for the section 3221(a) taxes
(a) Recapture of erroneously refunded against which the credit applied, and
■ Par. 8. Section 31.3134–1 is added to
credits under the Families First also include those persons’ common law
read as follows:
Coronavirus Response Act. Any amount employer clients that remain subject to
§ 31.3134–1 Recapture of credits. of credits for qualified sick leave wages all provisions of law applicable to
or qualified family leave wages under employers with respect to the payment
(a) Recapture of erroneously refunded sections 7001 and 7003, respectively, of
credits. Any amount of credits for of compensation.
the Families First Coronavirus Response (e) Applicability date. This section
qualified wages under section 3134 of Act (Families First Act), Public Law
the Code that is treated as an applies to all credit refunds under
116–127, 134 Stat. 178 (2020), as sections 7001 and 7003 of the Families
overpayment and refunded or credited modified by section 3606 of the First Act, as modified by section 3606
to an employer under section 6402(a) or Coronavirus Aid, Relief, and Economic of the CARES Act, advanced or paid on
6413(b) of the Code and to which the Security Act (CARES Act), Public Law or after July 24, 2020, and all credit
employer is not entitled, resulting in an 116–136, 134 Stat. 281 (2020), plus any refunds under section 2301 of the
erroneous refund to the employer, shall amount of credits for qualified health CARES Act advanced or paid on or after
be treated as an underpayment of the plan expenses under sections 7001 and July 24, 2020.
taxes imposed under section 3111(b) 7003, that are treated as overpayments
and so much of the taxes imposed under and refunded or credited to an employer § 31.3221–5T [Removed]
section 3221(a) as are attributable to the under section 6402(a) or 6413(b) of the
■ Par. 11. Section 31.3221–5T is
rate in effect under section 3111(b), as Internal Revenue Code (Code) and to
removed.
applicable, and may be assessed and which the employer is not entitled,
collected by the Secretary in the same resulting in an erroneous refund to the Douglas W. O’Donnell,
manner as the taxes. employer, shall be treated as an Deputy Commissioner for Services and
underpayment of the taxes imposed by Enforcement.
(b) Advance credit amounts section 3221(a) of the Code and may be Approved: July 10, 2023.
erroneously refunded. The assessed and collected by the Secretary
determination of any amount of credits Lily L. Batchelder,
in the same manner as the taxes. Assistant Secretary of the Treasury (Tax
erroneously refunded as described in (b) Recapture of erroneously refunded
paragraph (a) of this section must take Policy).
credits under the Coronavirus Aid, [FR Doc. 2023–15690 Filed 7–24–23; 11:15 am]
into account any amount of credits Relief, and Economic Security Act. Any
advanced to an employer under the amount of credits for qualified wages
BILLING CODE 4830–01–P
process established by the Internal under section 2301 of the CARES Act
Revenue Service in accordance with that is treated as an overpayment and
section 3134(j) and 3134(m). refunded or credited to an employer DEPARTMENT OF HOMELAND
under section 6402(a) or 6413(b) of the SECURITY
(c) Third party payors. For purposes
of this section, employers against whom Code and to which the employer is not
Coast Guard
an erroneous refund of the credits under entitled, resulting in an erroneous
section 3134 can be assessed as an refund to the employer, shall be treated
33 CFR Part 100
underpayment of the taxes imposed as an underpayment of the taxes
under section 3111(b) and so much of imposed by section 3221(a) of the Code [Docket Number USCG–2023–0308]
the taxes imposed under section 3221(a) and may be assessed and collected by
RIN 625–AA08
as are attributable to the rate in effect the Secretary in the same manner as the
under section 3111(b), as applicable, taxes. Special Local Regulation; Henderson
include persons treated as the employer (c) Advance credit amounts Bay, Henderson Harbor, NY
under sections 3401(d), 3504, and 3511, erroneously refunded. The
determination of any amount of credits AGENCY: Coast Guard, Department of
consistent with their liability for the
erroneously refunded as described in Homeland Security (DHS).
section 3111(b) or 3221(a) taxes against
paragraphs (a) and (b) of this section ACTION: Final rule
which the credit applied, and also
must take into account any amount of
include those persons’ common law SUMMARY: The Coast Guard is
credits advanced to an employer under
employer clients that remain subject to establishing a permanent special local
the process established by the Internal
all provisions of law applicable to Revenue Service in accordance with regulation for certain waters of
employers with respect to the payment sections 7001(b)(4)(A)(ii) and Henderson Bay in Henderson Harbor,
of wages or compensation, as 7003(b)(3)(B) of the Families First Act, NY, in support of the Christmas in July
applicable. as modified by section 3606 of the festival. This action is necessary to
(d) Applicability date. This section CARES Act, and section 2301(l)(1) of the provide for the safety of life on these
applies to all credit refunds under CARES Act. navigable waters near Henderson Bay,
section 3134 advanced or paid on or (d) Third party payors. For purposes Henderson Harbor, NY, during a boat
after September 8, 2021. of this section, employers against whom parade. This rulemaking will prohibit
an erroneous refund of the credits under persons and vessels from entering,
lotter on DSK11XQN23PROD with RULES1
§ 31.3134–1T [Removed] sections 7001 and 7003 of the Families transiting through, anchoring, blocking,
First Act, as modified by section 3606 or loitering within the event area
■ Par. 9. Section 31.3134–1T is
of the CARES Act, and the credits under adjacent to the city of Henderson
removed.
section 2301 of the CARES Act can be Harbor, unless authorized by the
■ Par. 10. Section 31.3221–5 is added to assessed as an underpayment of the Captain of the Port Buffalo or a
read as follows: taxes imposed by section 3221(a) designated representative.
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- 245,643 bytes
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- Original
- www.govinfo.gov