On Monday, March 1, 2021, the IRS announced publication of IRS Notice 2021-20 to clarify retroactive rules governing the Employee Retention Credit (ERC), particularly with respect to Paycheck Protection Program (PPP) loan recipients who were previously ineligible for the ERC.  The IRS is still working on clarifying guidance for the new ERC rules effective the first two quarters of 2021.  IMA had previously summarized these changes here.

This new notice provides answers to questions such as:

  • who are eligible employers
  • what constitutes full or partial suspension of trade or business operations
  • what is a significant decline in gross receipts
  • how much is the maximum amount of an eligible employer’s employee retention credit
  • what are qualified wages (noting the several weeks’ worth of wages and benefits paid and forgiven under a PPP loan are not eligible for the ERC, but certain wages and benefits paid before or after those weeks might be eligible because the Consolidated Appropriations Act retroactively opened up this opportunity)
  • how does an eligible employer claim the employee retention credit
  • how does an eligible employer substantiate the claim for the credit

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.