IRS Updates FAQ on Employee Retention Credit

May 04, 2020

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On April 29, the Internal Revenue Service (IRS) released a large expansion of their FAQ on the Employee Retention Credit (ERC).

The ERC was created as a part of the Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act, a $2.2 trillion legislative initiative designed to stave off the impact of the coronavirus pandemic. It is a fully refundable payroll tax credit. Employers can use one of two methods to determine their eligibility for the ERC:

  1. The suspension test – Employers qualify whose operations were suspended either fully or in part as a result of a government order relating to the coronavirus pandemic.
  2. The gross receipts test – Employers qualify whose quarterly receipts were reduced by more than 50%, compared to the same time period last year, as a result of the coronavirus pandemic.

The IRS’ informational page on the ERC is now nearly 100 questions long. The detailed FAQ covers many topics, from general information to special issues for employers and employees—and everything in between. Click here to take a look at the ERC FAQ in full.

Here is a look at some of the key items that were recently added to the FAQ:

  • Guidelines for determining eligibility under the suspension test
  • Clarification regarding dual eligibility for the ERC and the Paycheck Protection Program
  • Guidance about the aggregation of businesses with multiple locations
  • Guidelines for calculating qualified wages

For further details, visit irs.gov.