The ARPA additionally provides that for Q3 and Q4 an employer whose gross receipts declined more than 90% from the corresponding quarter in 2019 is a Severely Financially Distressed Employer (SFDE). This site uses cookies to store information on your computer. The notice has 71 questions and answers providing guidance and including some examples illustrating the rules under the employee retention credit. For the first two quarters of 2021, employers are eligible for the ERC for one or both quarters (determined separately) that their gross receipts are less than 80% of their gross receipts for the same calendar quarter in 2019. Notice 2021-23 - ERC Specialists Knowledge Base The Notice also clarifies other issues, particularly in determining if a governmental order limiting commerce, travel or group meetings due to COVID-19 results in a partial suspension of business operations. 12-02-2021: Notice of Intent to Award, Third Party Administration Services RFP #700-20-01 . The Internal Revenue Service ("IRS") issued Notice 2021-23 on April 2, 2021, for employers claiming the employee retention tax credit (the "ERTC") under the Coronavirus Aid, Relief, and. The Agreement awarded through this RFP process will replace the current Third-Party administrator service Agreement for the Savings Plus Program (Savings Plus . However, Notice 2021-20 only applied to ERTCs claimed for wages paid in 2020 despite extension of the ERTC program through June 30, 2021, under the Relief Act. Under the new notice, an ERC may be claimed by an eligible employer for qualified wages paid in the third and fourth calendar quarters of 2021. Thompson Coburn LLP continues to monitor these important developments in the CARES Act and other Federal relief efforts. in the case of a large eligible employer, work records and documentation showing that wages were paid for time an employee was not providing services. Please see below for more detailed information on how to participate. An employer that was not in existence during 2019 can use the relevant quarter in 2020 for the reference period, and. Prior Ropes & Gray LLP coverage of ERCs includes alerts on the CARES Acts tax-related provisions, initial ERC guidance, CAAs tax-related provisions, and ARPAs tax-related provisions. 3 0 obj The employer is deemed to make the election for any qualified wages included in the amount of payroll costs on the PPP Loan Forgiveness Application. Qualified wages are capped at $10,000 per employee per calendar quarter in 2021, meaning the maximum ERTC available per employee is $7,000 per quarter, and $14,000 in the aggregate for the first two calendar quarters of 2021. Notice 2021-23 indicates that an employer must keep documentation of its decline in receipts. Small employersthose with 500 or fewer full-time employeesmay claim advance payment of ERTCs to which they are entitled by filing Form 7200, Advance of Employer Credits Due to COVID-19, but such advances are not available to large employers (i.e., those with greater than 500 full-time employees) in the first two calendar quarters of 2021 like they were in 2020. 5 Additional changes to the ERC were made under section 9651 of the American Rescue Plan Act of 2021 ("ARP Act"), Pub. . Corrigendum to Public Notice No. When the IRS issues FAQs, it does so to provide taxpayers clarity and certainty, pursuant to a March 2019 Treasury policy statement. REGISTRATION PROCEDURES . 4 0 obj That began operating a trade or business after Feb. 15, 2020. This quick guide walks you through the process of adding the Journal of Accountancy as a favorite news source in the News app from Apple. The specified records include: Any records on which the employer relied to analyze whether a sufficient portion of the business was suspended or whether the impact on the business was sufficient to suspend operations, Records used to establish a gross receipts decline, Documentation of qualified health plan expenses, Documentation of aggregated group analysis. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP. The following are the highlights. Reg. Tax year 2020 B. Allocable Qualified Health Plan ExpensesQuestions 40-48I. The Internal Revenue Service (IRS) issued Notice 2021-23 on April 2, 2021, for employers claiming the employee retention tax credit (the ERTC) under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), as modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the Relief Act). You don't need to read the first 16 pages, however, there are some definitions to terms that show up throughout the 102 page notice that might be helpful. 178 (March 18, 2020),4 and section 303(d) of the Relief Act. <> 116-260, will continue to apply to the third and fourth calendar quarters of 2021. David J. Kaufmanis a member of Thompson Coburn LLPs Corporate & Securities practice group. (Answer 70.) L. No. If a taxpayer has claimed the ERC in 2020 because of the retroactive amendment allowing PPP loan borrowers to claim the ERC or otherwise file an adjusted employment tax return (Form 941-X) to claim the ERC, the Notice makes clear that the taxpayer must file an amended federal income tax return or, if applicable, a partnership subject to the Centralized Partnership Audit Regime must file an Administrative Adjustment Request to reduce the deduction for the wages on which the credits were claimed. Notice 2021-49 [PDF 189 KB] (34 pages) includes guidance for employers that pay qualified wages after June 30, 2021, and before January 1, 2022, and provides additional guidance on miscellaneous issues that apply to the employee retention credit in both 2020 and 2021. The Notice provides the deduction must be disallowed in the tax year during which the qualified wages giving rise to the credit were paid or incurred. Association of International Certified Professional Accountants. ZR1@7K, =?-oQ&O-$C`DK[B" v K"\%v3. The new guidance amplifies Notice 2021-20 (see Tax Alert 2021-0513) by incorporating the changes made by Section 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Disaster Relief Act), which apply on a prospective basis for qualified wages paid in the first two quarters of 2021. > IRS clarifies employee retention tax credit rules for Q1 and Q2 of 2021. Notice 2021-23 clarifies that, as in 2020, employers may access the ERC for the first two quarters of 2021 before they file their employment tax returns by reducing their employment tax deposits (see Tax Alert 2020-0816 for requirements in 2020). These changesapplicable to the third and fourth quarters of 2021include .
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