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IRS Releases Employee Retention Credit Guidance for 1Q and 2Q 2021

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On April 2, 2021, the IRS provided guidance on the Employee Retention Credit (ERC) as it applies to qualified wages paid in the first two quarters of 2021.

The ERC is a credit provided under section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and then amended by the Taxpayer Certainty and Disaster Relief Act of 2020. Notice 2021-23 provides additional guidance on claiming the ERC for qualified wages paid after December 31, 2020 and before July 1, 2021.

Notably, the guidance:

  • Clarifies the effect of Notice 2021-20 (which addressed issues related to the credit in 2020) on the current Notice 2021-23
  • Provides employers with more guidance on the significant decline in gross receipts test to determine employer eligibility
  • Explains the eligibility guidelines and process for claiming an advance payment of the credit

The IRS said a separate Notice addressing qualified wages paid in the third and fourth quarters of 2021 is forthcoming.

Please contact us with any questions.

 

Additional Resources:

IRS Releases Guidance on the Employee Retention Credit for 2020 Wages

Recorded Webcast: The Employee Retention Credit and Nonprofit Organizations

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