Who may file IRS Form 7200?
157 views | Last modified 9/27/2023 6:06:30 AM EST | Added by TaxBandits Team

Businesses and tax-exempt organizations that file an employment tax return(s) Form(s) 941, 943, 944, or CT-1 may File Form 7200 to request an advance payment of the tax credit for qualified sick and family leave wages and the employee retention credit.

Here's how eligible employers can claim tax credits:

  • No employer is required to file Form 7200. Instead of filing Form 7200 first, they should reduce the employment tax deposits to account for the credits. Only if the amount of the request for credit exceeds the reduced deposits, Form 7200 should be filed.
  • Wait for the refund when they claim the credits on their employment tax return(s).
  • Now, qualifying employers are entitled to file multiple Form 7200 within the same quarter. In case of cases, the amounts entered in the form filed later should be the cumulative totals for the quarter. When the employment tax return(s) are filed for 2020, the employer needs to reconcile any advance credit payments and reduced deposits for 2020.

The IRS has imposed restrictions for the below:

  • Self-employed individuals cannot request for an advance payment of credits for sick and family leave.
  • Employers who receive a Small Business Interruption Loan under the CARES Act cannot request to claim the employee retention credit.
  • Under the federal Families First Corona Relief Act (FFCRA), an employer can receive tax credits for qualified leave wages and also Small Business Interruption loans under the CARES Act; however, these wages are not qualified as “payroll costs” for purposes of loan forgiveness under the CARES Act.
  • Under the federal Families First Corona Relief Act (FFCRA), if an employer receives credit for qualified leave wages, those wages are not considered as 'qualified wages' under the CARES Act. So, the employer cannot receive a double-credit on wages.

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