KPMG report: Employee retention credit—additional guidance ties up many loose ends

U.S. Treasury and IRS provided additional guidance and information regarding the employee retention credit.

Additional guidance and information regarding the employee retention credit

The U.S. Treasury Department and IRS in August 2021—more than a year after enactment of the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) (Pub. L. No. 116-136)—provided additional guidance and information regarding the employee retention credit (ERC).

  • In particular, Notice 2021-49 generally offers guidance about the ERC under Code section 3134—which provides a credit for certain wages paid after June 30, 2021, and prior to January 1, 2022.  Notice 2021-49 also amplifies guidance previously provided in Notice 2021-20 and Notice 2021-23.
  • In addition, Rev. Proc. 2021-33 provides a safe harbor that may be used to compute gross receipts to determine eligibility to claim the ERC.

Read an August 2021 report [PDF 613 KB] prepared by KPMG LLP

This KPMG report discusses Notice 2021-49 and Rev. Proc. 2021-33 and addresses several open questions regarding not only the application of the ERC in the third and fourth quarters of 2021 (including a few revised definitions to ERC provisions), but also describes coordination among the ERC and other assistance programs (PPP, shuttered venue operator grants, restaurant revitalization grants, etc.) and clarifications to existing ERC terms (such as the effect of the section 280C add-back to wage deductions in prior tax years).

 

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