1. Form 941 and Form 940 (Deposit Only)
As of April 15, 2020, the Internal Revenue Service has NOT announced any extension about Form 941 which will be due by April 30, 2020. The Service neither announced the deferral of payroll taxes due in the month of April.
Statewide – March 2020
Employers statewide directly affected by the new coronavirus (COVID-19) may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit payroll taxes without penalty or interest.
To request the extension,
- employers must first file the report(s) and/ or payment(s) electronically within 60 days (June 1) of the original due date (April 1)
- send a letter to the EDD specifically requesting an extension of time under section 1111.5 of the California Unemployment Insurance Code (CUIC). The letter must provide detailed information as to why the report(s) and/or payment(s) could not be submitted in a timely manner.
- Mail the letter of extension to the below address:
Employment Development Department
PO Box 826880
Sacramento, CA 94246-0001
3. Payroll Tax Deferral included in the CARES Act
- Paycheck Protection Program loan recipients may defer paying these taxes.
The CARES Act suggested that employers who benefit from the PPP could NOT defer payment of social security taxes.
The new guidance clarifies that PPP loan recipients ARE eligible to defer deposit and payment of the employer’s share of social security tax.
- Once the employer receives a decision from its lender that the loan is forgiven, however, the employer is no longer eligible to defer such taxes after that date.
- The deferral applies to employer’s share of social security tax that would be required to be made during the period beginning on 3/27/20 (Friday) to 12/31/20.
Semi-weekly depositor: payroll dates from 3/21/20 (Saturday) ~ 12/25/20 (Friday)
Monthly depositor: payroll dates from 3/1/2020 (Due on 4/15/20) ~ 11/30/2020 (12/15/20)
- Revised Form 941 – 2nd Quarter (Apr ~ Jun) Information is pending on how to reflect the deferred employer’s Social Security tax due on or after March 27, 2020 for the first quarter of 2020. No special election will be required.
- Deferred Deposit Dates (Applicable Dates)
On December 31, 2021, 50 percent of the deferred amount; and
On December 31, 2022, the remaining amount
- Self-Employed Individuals are eligible to defer payment of 50 percent of the social security tax on net earnings from self-employment for the period beginning on 3/27/20 to 12/31/20.
- Can an employer that is eligible to the employee retention credit defer?
4. Employee Retention Tax Credit (ERTC)
Only available to eligible employers who did NOT receive the Paycheck Protection Program (PPP) loan
- Who are eligible employers?
- Have fully or partially suspended operations during any calendar quarter in 2020 due to orders from an appropriate government authority limiting commerce, travel, or group meeting due to COVID-19; OR
- Have experienced a significant decline in gross receipts during the calendar quarter
- Maximum value of ERTC
- 50 percent of qualified wages paid to each employee during inoperability
- $10,000 in maximum wages; therefore, maximum credit is $5,000 per employee
- Fully refundable if the credit total is more than employer portion of Social Security tax
Available to all eligible employers regardless of size including tax-exempt organizations
Excludes state and local governments and their instrumentalities, self-employed individuals, and small businesses that receives the Paycheck Protection Program (PPP)