"since the taxpayer is on the cash basis?"

In this case, though, that part you are asking about is the Banking, not the event. Payroll is reported on cash basis, the credit is taken on cash basis, and the filing for the credit in 2020 is being taken against the 2020 wages. The employer also might have had the money in hand already by holding back deposit amounts, and if not (such as filing an amended 941X), there is going to be a Receivable on the Balance Sheet.

"Notice 2020-22 provides relief from the failure to deposit penalty under section 6656 of the Internal Revenue Code for not making deposits of employment taxes, including taxes withheld from employees, in anticipation of the FFCRA paid leave credits and the employee retention credit. The ability to defer deposit and payment of the employer's share of Social Security tax under section 2302 of the CARES Act applies to all employers, including employers entitled to paid leave credits and employee retention credits."

Which is why the wages would be reduced on the 2020 1120S, even if you are waiting for the credit to be refunded to you.