IRS: Payroll Tax Relief for Churches

March 26, 2020

As policy and law changes are happening quickly, Church United's promise is to provide you with the best and most accurate information to help guide you and the church. Employment law attorney, Jennifer Bursch, has been providing detailed information during our video conference calls in English and Spanish. 

If you prefer to receive these communications in Spanish, please contact Church United.

Here are Attorney Bursch's excerpts regarding IRS Payroll Tax:

• “When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series, Employer's Quarterly Federal Tax Return) with the IRS."
• "Under guidance that will be released next week [this week], eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than depositing them with the IRS."
• "The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees."
• "If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able to file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week."

By way of further example, here's what the IRS provides:

• “If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 in taxes he/she was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on the next regular deposit date."
• "If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000."

The U.S. Treasury Department, IRS, and the U.S. Department of Labor announce a plan "to implement Coronavirus-related paid leave for workers and tax credits for small and midsize businesses to swiftly recover the cost of providing Coronavirus-related leave." The entire release can be found here.