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Guidance on employee retention credit in CARES Act (COVID-19)

Guidance on employee retention credit in CARES Act

Several releases today address the employee retention credit—a provision included in the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) (Pub. L. No. 116-136).

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The employee retention credit is a refundable payroll credit based with regard to wages paid by an eligible employer whose business has been financially affected by COVID-19.

With respect to tax-exempt employers, the credit generally is available to any tax-exempt employer, regardless of size, whose operations either have been fully or partially suspended due to a governmental order related to COVID-19 or have experienced a significant decline in gross receipts.  Governmental employers—presumably including state universities—are not eligible for the employee retention credit.

The releases today concerning the employee retention credit include:

  • An IRS release—IR-2020-62 (March 31, 2020)—includes “questions and answers” (Q&As) about the employee retention credit.
  • The IRS released Notice 2020-22 [PDF 31 KB] to provide penalty relief with regard to employers’ deposits of federal employment taxes—including deposits of withheld income taxes and employment taxes—that are reduced in anticipation of tax credits (including the employee retention credit)
  • The U.S. Senate Finance Committee Republican staff released a set of “frequently asked questions” (FAQs) about the credit.

 

For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 | ruthmadrigal@kpmg.com

Preston Quesenberry | +1 202 533 3985 | pquesenberry@kpmg.com

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