The IRS and the Treasury issued a safe harbor to the employers, allowing them to exclude certain items from their gross receipts solely to determine eligibility for the Employee Retention Credit (ERC).
The IRS and Treasury have brought in the following changes:
In this update, the IRS and the Treasury have also answered some of the queries they received regarding the employee retention credit, such as:
Businesses that began operating on February 15, 2020, are defined as ‘recovery startup businesses’ subject to meeting some other criteria:
Yet another change under the ARPA rules for the CARES Act 2021 ERC is that, for the third and fourth quarters of 2021, eligible employers must claim the credit against the employer’s share of Medicare tax in contrast, against the employer’s share of Social Security tax as was the case earlier.
The latest guidance of the IRS on owners of S-corporations and C-Corporations states that the Employee Retention Credit (ERC) will not be available for the wages paid to a majority owner of the S- corporation or C Corporation or such owner’s spouse, if the majority owner has a sibling (whether by whole or half-blood), ancestor, or lineal descendant.
However, suppose the majority owner of a corporation has no siblings (whole or half-blood), ancestor, or lineal descendant. In that case, those wages will qualify for the Employee Retention Credit.
The developments in the employee retention tax credit can seem confusing and overwhelming. To help you find your way through this complex world of tax credits, myCPE holds frequent webinars where tax experts educate online. Make sure you attend a webinar, virtual conference, or buy a self-study course that will help you understand better.
If you want to understand the ERC topic, Jason Dinesen has trained more than fifty thousand professionals on ERC and related updates on myCPE, and has received some great reviews and feedback from attendees. We recommend you to register for a Live webinar on LATEST EMPLOYEE RETENTION TAX CREDITS (ERC) UPDATES (INCL. AUG 10 - SAFE HARBOR UPDATE).