Tax Alert: New IRS Guidance for Employers Claiming the CARES Act Employee Retention Credit

Recently issued IRS guidance, Notice 2021-49, provides important information for employers claiming the employee retention credit originally enacted in the Coronavirus Aid, Relief, and Economic Security Act and later updated by the American Rescue Plan Act of 2021. A high-level overview of the guidance is as follows:

  • Credit is available on eligible wages in the second half of 2021
  • “Recovery startup businesses” (business that began after 2/15/20, with annual gross receipts under $1,000,000, that is not otherwise an eligible employer) are eligible for up to $50,000 in ERTC
  • Certain wages are not eligible (i.e., payroll costs in connection with a shuttered venue grant, restaurant revitalization grants, nor wages paid to majority owners and their spouses with some additional stipulations)
  • Clarified certain wages are eligible (i.e., tips)

As always, we at First Advantage will continue to monitor all IRS guidance and all future legislative action. Please ensure you are subscribed to our Tax Alerts to stay informed! If you have any questions on the programs discussed in this alert and how they might impact you, please contact your First Advantage Tax Consultant or your legal counsel.

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