On April 29, 2020, the IRS released new FAQs providing significant guidance on the employee retention credit.  We are still analyzing the guidance, but in general, we are concerned that the IRS’s approach to interpreting its application may make it difficult for some employers in difficult financial conditions to claim the credit.  Moreover, given that the credit has been available for over a month with respect to qualified wages paid as many as six weeks ago, employer may have made a reasonable good faith determination of their eligibility for and the amount of the credit, which now conflicts with some of the guidance in the FAQs.  Although caution should be taken to consider the IRS’s position in the FAQs, the information posted on the IRS website is the lowest form of guidance that the IRS issues.  As noted prominently on each page of FAQs posted to the IRS website, “This FAQ is not included in the Internal Revenue Bulletin, and therefore may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case.”

We will post a series of articles summarizing the various aspects of the guidance over the next few days.  In the interim, Q&A-74 specifically confirms our analysis of the earlier guidance and is consistent with the methodology described in this post.

On April 30, we posted two articles in the series.  The first article analyzes the IRS FAQs related to the employer aggregation rules and an employer’s eligibility based on a governmental order fully or partially suspending its operations.  The second article analyzes employer eligibility on account of a “significant decline in gross receipts.”