Purpose of Form

A qualified tax-exempt organization (including certain governmental entities) that continued to pay or incur wages after activities of the organization (treated as an active trade or business for this purpose) became inoperable because of damage from a qualified disaster may be able to use Form 5884-D to claim the 2020 qualified disaster employee retention credit against certain payroll taxes. This is similar to the credit businesses claim against income taxes using Form 5884-A. The credit is equal to 40% of up to $6,000 of qualified wages paid to or incurred for each eligible employee. The credit is claimed against the employer portion of social security tax on wages paid to all employees during an employment tax period. A list of qualified disasters is available at the end of these instructions.

The organization files Form 5884-D after it files its employment tax return for the employment tax period for which it is claiming the credit. The organization begins by filing Form 5884-D for the first employment tax period in which qualified wages were paid to an eligible employee. The organization continues to file Form 5884-D for each subsequent employment tax period in or for which it paid additional amounts that affect the cumulative credit. For each subsequent employment tax period, the organization figures the cumulative credit for that employment tax period and all previous employment tax periods beginning with the first employment tax period in which qualified wages were paid. That amount is adjusted for any credit amounts claimed on previously filed Forms 5884-D. The organization continues to file Form 5884-D for each subsequent employment tax period for which the cumulative credit amount changes. The cumulative credit amount may change if:

A qualified tax-exempt organization filing its own Form 5884-D should file one Form 5884-D for the organization per employment tax period. A third-party payer will file a single separate Form 5884-D for each qualified tax-exempt organization per employment tax period.

Form 5884-D is filed separately from any other returns. The credit claimed on Form 5884-D will not affect the tax liability reported on the organization’s employment tax returns. Nevertheless, the organization may reduce its required deposits for an employment tax period by the amount of its anticipated credit for that employment tax period. The IRS will refund the amount shown on line 12 of Form 5884-D, plus any interest that applies, unless the IRS corrects Form 5884-D during processing or the organization owes other taxes, penalties, or interest.

Qualified Tax-Exempt Organization

A qualified tax-exempt organization is an organization described in section 501(c) and exempt from tax under section 501(a) if:

Eligible Employee

An eligible employee is an employee whose principal place of employment with the qualified tax-exempt organization immediately before the incident period of the qualified disaster was in the 2020 qualified disaster zone.

Qualified Wages

Qualified wages are wages a qualified tax-exempt organization paid to or incurred for eligible employees at any time on or after the date the organization’s activities (treated as an active trade or business for this purpose) first became inoperable at the employee’s principal place of employment (determined immediately before the first day of the incident period of the qualified disaster) and before the earlier of:

Qualified wages include wages paid or incurred whether an eligible employee performs no services, performs services at a place of employment other than the principal place of employment, or performs services at the principal place of employment before significant activities have resumed.

Qualified wages do not include any wages that exceed $6,000 for an eligible employee for an employment tax period (reduced by the amount of qualified wages credited for any prior employment tax period).

Wages qualifying for the credit generally have the same meaning as wages subject to social security and Medicare taxes. However, qualified wages don't include any wages used to claim a coronavirus-related employee retention credit on an employment tax return, such as Form 941, Employer's QUARTERLY Federal Tax Return.

When To File

File Form 5884-D after the organization has filed its employment tax return for the employment tax period for which it is claiming the credit. File Form 5884-D for each employment tax period in or for which the organization paid amounts that affect the cumulative credit as described under Purpose of Form, earlier.

A qualified tax-exempt organization that files its employment tax return under its own employer identification number (EIN) (including organizations that file using a payroll service provider or reporting agent) should file one Form 5884-D for the organization per employment tax period. A third-party payer, such as a certified professional employer organization, a non-certified professional employer organization, or an agent under section 3504, who files an aggregate employment tax return and is filing Form 5884-D for a qualified tax-exempt organization claiming the credit should use the third-party’s name and EIN on Form 5884-D and should enter the qualified tax-exempt organization’s name, address, and EIN on line 1. A third-party payer who files an aggregate employment tax return must file a single separate Form 5884-D for each qualified tax-exempt organization claiming the credit in an employment tax period.

.Form 5884-D must be filed within 2 years from the date the tax reported on the employment tax return was paid, or 3 years from the date the employment tax return was filed, whichever is later..

Where To File

Send Form 5884-D to the address provided at the bottom of the form.

More Information

For more information about this credit, see Public Law 116-260, Division EE, sections 301 and 303(d).

Name and Address

If the organization receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address line "C/O" followed by the third party’s name and street address or P.O. box.

A third-party payer who files an aggregate employment tax return and is filing Form 5884-D for a qualified tax-exempt organization client claiming the credit should enter the third party’s name, address, and EIN.

Include the suite, room, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the organization has a P.O. box, enter the box number instead of the street address.

Line 1

If a third-party payer who files an aggregate employment tax return is filing Form 5884-D for a qualified tax-exempt organization client claiming the credit, enter the name, address, and EIN of the qualified tax-exempt organization (defined earlier) for whom the third-party payer is claiming the credit. All information reported on Form 5884-D by a third-party payer for a qualified tax-exempt organization must relate solely to the organization identified on line 1.

Line 2

The credit is available only to an organization that is a qualified tax-exempt organization. The organization must be able to check “Yes” on either line 2a or 2b to qualify for the credit.

Line 3

Line 5

As discussed earlier under Purpose of Form, the organization claims this credit against the employer’s portion of social security tax on wages paid to all employees during the employment tax period. The organization files Form 5884-D for each employment tax period during which it claims a credit. Each Form 5884-D figures the cumulative credit the organization is entitled to for all periods and reduces the amount claimed for the period by any amounts claimed on previously filed Forms 5884-D.

Check the box(es) on line 5 to indicate the year (and quarter, if applicable) for the employment tax period for which the organization is claiming the credit.

Line 6

Enter on line 6a the total qualified wages (defined earlier) the organization paid in all employment tax periods through the end of the employment tax period indicated on line 5 to eligible employees of the organization.

Line 8

Enter the total amount of credits claimed from line 12 of any previously filed Forms 5884-D minus the total amount of credits repaid from line 13 of any previously filed Forms 5884-D. Each Form 5884-D figures the cumulative credit the organization is entitled to for all periods. The amount of the cumulative credit reported on line 6b must be reduced by the previously claimed credits and increased by any previously repaid amounts to determine the credit claimed for the employment tax period for which Form 5884-D is filed.

.If the credit claimed for a prior period was limited by the employer’s social security tax liability for that period, any excess credit will be carried forward and included in the cumulative credit figured on any subsequent Form 5884-D. The excess credit is not included in the amount on line 8..

Line 10

Enter the total taxable social security wages and tips reported on the employment tax return indicated on line 4 for the employment tax period indicated on line 5. For example, taxable social security wages and tips included on Form 941 for wages paid in the 4th quarter of 2020 were reported on the following lines.

Line 12

If your credit is less than $1, we will apply it only if you ask us in writing to do so.

Line 13

You may pay the amount you owe on line 13 electronically using the Electronic Federal Tax Payment System (EFTPS), by credit or debit card, or by check or money order.

Signature

Form 5884-D must be signed by the president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate officer (such as a tax officer) authorized to sign. A receiver, trustee, or assignee must sign any return filed for the organization. For a trust, the authorized trustee must sign.

Paid Preparer

A paid preparer must sign Form 5884-D and provide the information in the Paid Preparer Use Only section if the preparer was paid to prepare Form 5884-D and is not an employee of the filing entity. Paid preparers must sign paper returns with a manual signature. The preparer must give the organization a copy of Form 5884-D in addition to the copy to be filed with the IRS.

If you are a paid preparer, enter your preparer tax identification number (PTIN) in the space provided. Include your complete address. If you work for a firm, enter the firm’s name and the EIN of the firm. You cannot use your PTIN in place of the EIN of the tax preparation firm.

You can apply for a PTIN online or by filing Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal. For more information about applying for a PTIN online, visit the IRS website at IRS.gov/PTIN.

Generally, you are not required to complete this section if you are filing Form 5884-D as a reporting agent and have a valid Form 8655, Reporting Agent Authorization, on file with the IRS. However, a reporting agent must complete this section if the reporting agent offered legal advice, for example, advising the client on determining whether its employees are eligible employees for purposes of this credit.