Late Wednesday, the IRS released extensive new guidance in the form of frequently asked questions (“FAQs”) on the IRS website addressing various aspects of the employee retention credit. This is the second in a series of articles that will address various aspects of the FAQs. This article addresses employer eligibility for the credit based on a significant decline in gross receipts. In our first article, we discussed the IRS’s interpretation of the aggregation rules under section 2301(d) of the CARES Act and the determination of employer eligibility based on a full or partial suspension of operations due to a government order. Subsequent articles will address the determination of qualified wages and allocable qualified health plan expenses, issues related to the income and deduction treatment of qualified wages for employees and employers, and issues related to the use of third-party payers. Before the release of the IRS FAQs, we addressed how employers can claim the employee retention credit and its interaction with the deferral of employer social security tax deposits (see earlier article).
Employers should carefully consider the FAQs, but remain mindful that although they represent the current thinking of the IRS, the FAQs are not binding guidance. Continue Reading IRS FAQs on Retention Credit Provides Guidance on “Significant Decline in Gross Receipts”