On May 7, the IRS updated its frequently asked questions to reverse its earlier determination that health plan expenses paid or incurred by an employer to provide health benefits to furloughed employees who were not paid other wages were not qualified health plan expenses for which an employer could claim the employee retention credit.  The IRS revised Q&A-64 and Q&A-65 after the guidance came under bipartisan criticism from both Senate Finance Committee and House Ways and Means Committee leadership.  Senators Grassley and Wyden, chair and ranking member of the Senate Finance Committee, and Representative Neal, chair of the House Ways and Means Committee, sent a letter to Treasury Secretary Mnuchin on May 5 urging Treasury and the IRS to change its position.  The guidance came as a surprise because it conflicted with the Joint Committee on Taxation report that indicated such expenses were intended to be treated as eligible for the employee retention credit.  Left unchanged by Treasury and the IRS is the distinction between payments made to furloughed employees and severance paid to terminated employees (see earlier article).