Frequently asked question #28 “What orders from an appropriate governmental authority may be taken into account for purposes of the Employee Retention Credit?” under the Determining What Types of Governmental Orders Related to COVID-19 May be Taken into Account for Purposes of the Employee Retention Credit section of FAQs: Employee Retention Credit under the CARES Act, provided by the IRS.gov to help business owners understand the ERC program. Information is below for the question #28 What “orders from an appropriate governmental authority” may be taken into account for purposes of the Employee Retention Credit?
ERC Credit Frequently Asked Question #28:
COVID-19-Related Employee Retention Credits:
Determining What Types of Governmental Orders May be Taken into Account for Purposes of the Employee Retention Credit FAQs
28. What “orders from an appropriate governmental authority” may be taken into account for purposes of the Employee Retention Credit?
Orders, proclamations, or decrees from the Federal government, or any State or local government are considered “orders from an appropriate governmental authority” if they limit commerce, travel, or group meetings due to COVID-19 in a manner that affects an employer’s operation of its trade or business, including orders that limit hours of operation and, if they are from a State or local government, they are from a State or local government that has jurisdiction over the employer’s operations (referred to as a “governmental order”).
Statements from a governmental official, including comments made during press conferences or in interviews with the media, do not rise to the level of a governmental order for purposes of the Employee Retention Credit.
Additionally, the declaration of a state of emergency by a governmental authority is not sufficient to rise to the level of a governmental order if it does not limit commerce, travel, or group meetings in any manner.
Further, such a declaration that limits commerce, travel, or group meetings, but does so in a manner that does not affect the employer’s operation of its trade or business does not rise to the level of a governmental order.
A governmental order allows employers to qualify as Eligible Employers for purposes of claiming the Employee Retention Credit without regard to the level of enforcement of the governmental order.
Governmental orders include:
- An order from the city’s mayor stating that all non-essential businesses must close for a specified period;
- A State’s emergency proclamation that residents must shelter in place for a specified period, other than residents who are employed by an essential business and who may travel to and work at the workplace location;
- An order from a local official imposing a curfew on residents that impacts the operating hours of a trade or business for a specified period;
- An order from a local health department mandating a workplace closure for cleaning and disinfecting.
Whether the operations of a trade or business are considered essential or non-essential will often vary from jurisdiction to jurisdiction. An employer should determine whether it is an essential or non-essential business by referring to the governmental order affecting the employer’s operation of its trade or business.
For more information on when a business’s operations are considered to be fully or partially suspended due to a governmental order, see “Determining When an Employer’s Trade or Business Operations are Considered to be Fully or Partially Suspended Due to a Governmental Order.”
Example 1: Governor of State Y issues an order that all non-essential businesses must close from March 20, 2020 until April 30, 2020.
The order provides a list of non-essential businesses, including gyms, spas, nightclubs, barber shops, hair salons, tattoo parlors, physical therapy offices, waxing salons, fitness centers, bowling alleys, arcades, racetracks, indoor children’s play areas, theaters, chiropractors, planetariums, museums, and performing arts centers.
Employers that provide essential services may remain open. The governor’s order is a governmental order limiting the operations of non-essential businesses, entitling employers with non-essential businesses to claim the Employee Retention Credit for qualified wages.
Example 2: Mayor of City Y holds a press conference in which she encourages residents to practice social distancing to prevent the spread of COVID-19.
The statement during the press conference is not an order limiting commerce, travel, or group meetings. Accordingly, the mayor’s statement would not be a governmental order for purposes of the Employee Retention Credit.
Example 3: A restaurant is ordered by a local health department to close due to a health code violation. Since the order is unrelated to COVID-19, it would not be considered a governmental order for purposes of the Employee Retention Credit.
For more Internal Revenue Service (IRS) Department of the Treasury Employee Retention Credit (ERC) Determining What Types of Governmental Orders May be Taken into Account for Purposes of the Employee Retention Credit FAQs, visit the official IRS.gov tax website.
Conclusion and Summary on ERC Credit FAQ #28. What “orders from an appropriate governmental authority” may be taken into account for purposes of the Employee Retention Credit?
The “What orders from an appropriate governmental authority may be taken into account for purposes of the Employee Retention Credit?” is Frequently Asked Question #28 of many commonly asked questions small business owners are wondering about how to file the Employee Retention Tax Credit (ERTC). The IRS ERC Tax Credit program is a confusing and complex process to determine the correct ERC calculations your business qualifies for. Answers to “What orders from an appropriate governmental authority may be taken into account for purposes of the Employee Retention Credit?” and filling out form 941-X may change slightly from frequently updated rules and regulations from the IRS. Leave a comment below if you have further questions on ERC Credit FAQ #28.
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Disaster Loan Advisors can assist your business with the complex and confusing Employee Retention Credit (ERC), Form 941-X, and the Employee Retention Tax Credit (ERTC) program.
Depending on eligibility, business owners and companies can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Tax Credit Program is a valuable IRS tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.
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If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors™ is a good fit for you. STAY SAFE. STAY COMPLIANT. KEEP MORE OF YOUR REFUND.™
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