Aug 11, 2021
The employee retention credit (ERC) is a new credit created in
the Coronavirus Aid, Relief, and Economic Security (CARES) Act
passed in March 2020 and later modified with subsequent
Tax preparers and their clients have been anticipating updated
guidance on several remaining questions related to the ERC. On
August 4, the IRS issued Notice 2021-49
IR-2021-165. Further, on August 10, the IRS issued Rev. Proc.
2021-33, which provides a safe harbor permitting employers to
exclude certain amounts from gross receipts solely for purpose of
determining eligibility for the ERC.
Notice 2021-49 provides guidance on the ERC provided under Sec.
3134 of the Internal Revenue Code, as added by Sec. 9651 of the
American Rescue Plan Act of 2021, and applies to qualified wages
paid after June 30, 2021, and before Jan. 1, 2022. The notice
amplifies Notices 2021-20
and 2021-23 with
additional guidance on claiming the ERC in the third and fourth
calendar quarters of 2021 as well as guidance on several
miscellaneous ERC concerns.
In this Tax Section Odyssey episode, April Walker, CPA, CGMA,
Lead Manager — Tax Practice & Ethics, Association of International
Certified Professional Accountants, representing AICPA & CIMA, and
Kristin Esposito, CPA, MST, Director — Tax Policy & Advocacy,
Association of International Certified Professional Accountants,
representing AICPA & CIMA, dissect the latest guidance.
What you’ll learn in this episode
- Are wages of >50% shareholders and their spouses are
considered qualified wages? (2.25)
- The calculation of gross receipts and a discussion on how
Paycheck Protection Program (PPP) loans and other COVID-19 relief
programs are incorporated (3.56)
- Are cash tips considered qualified wages? (5.25)
- The use of full-time employees or full-time equivalents in the
determination of whether a business is a small or a large-eligible
employer and the period for this calculation (5.53)
- Timing of the wage deduction disallowance (7.11)
- Determination of eligible employer status clarification for the
2021 credit (9.06)
- Recovery startup business overview (9.58)
- What is a severely financially distressed employer?
- Potential legislative impacts to the ERC (13.27)
Employee retention credit guidance and resources — The ERC is
an important of the COVID-19 relief legislation for small
businesses. This library provides the ins and outs of calculating
- AICPA Town Hall
Series — Bi-monthly, high-impact news broadcast series that
delivers the latest news, analysis, insights and practical guidance
to accounting and finance professionals and responds to pressing
issues facing the profession
Challenges with contingency fees and the ERC — Explore the
prospect of contingent fees for ERC work and how regulatory rules
govern its usage with the AICPA’s April Walker and Ed Karl on this
Tax Section Odyssey episode from June 2021.
What to know about the 2021 ERC before April 30 — On this April
2021 Tax Section Odyssey episode, Jan Lewis, CPA, with Haddox Reid
CPAs & Advisors, reviews the latest ERC guidance and important
information to help your clients benefit from this credit.
PPP and ERC in 2020 — This Tax Section Odyssey episode from
March 2021 reviews the IRS Notice 2021-20 and highlights what you
need to know about the interaction between the ERC and PPP.
Breaking down the employee retention credit – This February
2021 Tax Section Odyssey episode contains a deep dive on the
calculation of the ERC.
FAQs: Employee Retention Credit under the CARES Act — IRS
answers to frequently asked questions on the ERC
Rev. Proc. 2021-33 provides a safe harbor that permits a
taxpayer to exclude certain items from “gross receipts” under Sec.
448(c) and Sec. 6033, as applicable, solely for purposes of
determining eligibility to claim the ERC
2021-20 — Guidance for employers claiming the ERC for calendar
quarters in 2020
Notice 2021-23 — Guidance on the ERC under the CARES Act for
the first and second calendar quarters of 2021
2021-49 — Guidance that amplifies Notices 2021-20 and 2021-23
by providing additional guidance on claiming the ERC in the third
and fourth calendar quarters of 2021.
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