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IRS recently announced a draft revised 2021 Form 941. The revisions are to accommodate changes due to the American Rescue Plan Act (ARPA) signed into effect on March 11.

ARPA creates a 100 percent subsidy for COBRA coverage premiums from April 1, 2021, through September 30, 2021. COBRA benefits are available for employees and their qualifying dependents if an employee lost or will lose their health benefits due to involuntary separation or reduction in hours. Employers subject to COBRA benefit payments can take a refundable tax credit against their payroll taxes by completing the following lines of the revised 941:

  • Nonrefundable portion of COBRA premium assistance credit (Line 11e)
  • Refundable portion of COBRA premium assistance credit (Line 13f)
  • Number of individuals provided COBRA premium assistance (Line 11f)

The 941 revision also includes a new check box on line (18b) for the eligibility of the employee retention credit solely because the business is a “recovery startup business”. A business qualifies as a “recovery startup business” if it began operations after February 15, 2020 and was partially or fully shut down due to a significant decline in gross receipts or because of a governmental order.

For more information on the COBRA premium assistance and tax credit, click here.




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