IRS updates, expands FAQs on employee retention credit (COVID-19)

IRS updates, expands FAQs on employee retention credit

The IRS today updated and expanded a list of “frequently asked questions” (FAQs) concerning the employee retention credit that is available as a relief measure in response to the coronavirus (COVID-19) pandemic.

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Read the new FAQs as posted on a dedicated IRS webpage.


Overview

The employee retention credit—included in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136)—is a refundable payroll credit of 50% of qualified compensation paid by eligible employers whose business has been financially affected by COVID-19.  Qualified compensation is limited to the first $10,000 of compensation, including health benefits, paid to the employee. Thus, the maximum credit is $5,000 (50% x $10,000) per employee.

The IRS on March 31, 2020, released an initial set of FAQs concerning the employee retention credit. Read TaxNewsFlash. The Senate Finance Committee also on March 31, 2020, released a set of 12 FAQs on the employee retention credit. Read TaxNewsFlash

Today’s FAQs include approximately 90 new sets of questions and answers regarding the employee retention credit under the CARES Act. The FAQs (updated April 29, 2020) also include this statement:

This FAQ is not included in the Internal Revenue Bulletin, and therefore may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case.

The purpose of this report is to provide a link to the new FAQs.

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