Travis Software Official Blog

A senior tax analyst for the Internal Revenue Service (“IRS”) recently clarified how to properly claim the payroll tax credit on Form 941 for the ARRA premium subsidy. Through an informal announcement, the IRS agent stated that the ability to claim the credit for the premium subsidy is based on the year in which the payment is received rather than the year the payment is applied. The agent further stated that the date on which the employer is informed of a payment received is not at issue, but only when the payment was actually received.

The specific example provided confirms that the subsidy credit arising out of a premium payment received in 2010 that covered a premium period in 2009 (for example, a first payment by a new QB) shall be included in the 2010 Form 941. The inference is that a premium payment made in December 2009 that applies to a period in 2010 generates a credit on Form 941 for the Fourth Quarter, 2009 rather than the first quarter of 2010.

In response to this guidance, Travis is adding a report to TravisCobra and WebCOBRA.com that will document ARRA premium subsidy payments based on the date the payment is processed rather than the period to which it applies. We plan to complete this report quickly so that you may pass it to your clients and that they may know whether they are required to make any adjustments to Form 941 for the fourth quarter 2009. Please note that the fourth quarter 2009 Form 941s are due at the end of this month.