If A Governmental Order Requires An Employer To Close Its Workplace, But The Employer Is Able To Continue Operations Comparable To Its Operations Prior To The Closure By Requiring Employees To Telework, Is The Employer Considered To Have A Suspension Of Operations? – #15 ERC IRS Notice 2021-20

October 17, 2022 Leave a comment

Question #15:
If a governmental order requires an employer to close its workplace, but the employer is able to continue operations comparable to its operations prior to the closure by requiring employees to telework, is the employer considered to have a suspension of operations?

Found under the D. Full or Partial Suspension of Trade or Business Operations section of the Employee Retention Credit (ERC) IRS Notice 2021-20 with updated guidance to help business owners follow the current ERC rules. 

The answer to question #15, If a governmental order requires an employer to close its workplace, but the employer is able to continue operations comparable to its operations prior to the closure by requiring employees to telework, is the employer considered to have a suspension of operations?, can be found below.

ERC IRS Notice 2021-20 Question #15:

D. Full or Partial Suspension of Trade or Business Operations

If a governmental order requires an employer to close its workplace, but the employer is able to continue operations comparable to its operations prior to the closure by requiring employees to telework, is the employer considered to have a suspension of operations?

No. If an employer’s workplace is closed by a governmental order,but the employer is able to continue operations comparable to its operations prior to the closure, including by requiring its employees to telework, the employer’s operations are not considered to have been fully or partially suspended as a consequence of a governmental order.

However, if the closure of the workplace causes the employer to suspend business operations for certain purposes, but not others, it may be considered to have a partial suspension of operations due to the governmental order.

Example 1: Employer C, a software development company, maintains an office in a city where the mayor has ordered that only essential businesses may operate. Employer C’s business is not essential under the mayor’s order, and therefore Employer C is required to close its office. Prior to the governmental order, all employees at the company tele worked once or twice per week, and business meetings were held at various locations.

Following the governmental order, the company ordered mandatory telework for all employees and limited client meetings to telephone or video conferences. Employer C’s business operations are not considered to be fully or partially suspended due to the governmental order because the employer is able to continue its business operations in a comparable manner.

Example 2: Employer D operates a physical therapy facility in a city where the mayor has ordered that only essential businesses may operate. Employer D’s business is not considered essential under the mayor’s order, and therefore Employer D is required to close its workplace. Prior to the governmental order, none of Employer D’s employees provided services through telework and all appointments, administration, and other duties were carried out at Employer D’s workplace.

Following the governmental order, Employer D moves to an online format and is able to serve some clients remotely, but employees cannot access specific equipment or tools that they typically use in therapy and not all clients can be served remotely. Employer D’s business operations are considered to be partially suspended due to the governmental order because Employer D’s workplace, including access to physical therapy equipment, is central to its operations, and the business operations cannot continue in a comparable manner.

Example 3: Employer E, a scientific research company with facilities in a state in which the governor has ordered that only essential businesses may operate, conducts research in a laboratory setting and through the use of computer modeling. Employer E’s business is not essential under the governor’s order, and therefore Employer E is required to close its workplace. Prior to the governmental order, Employer E’s laboratory-based research operations could not be conducted remotely (other than certain related administrative tasks) and employees involved in laboratory-based research worked on-site.

Employer E’s computer modeling research operations could be conducted remotely, and employees who engaged in this portion of the business often teleworker. Following the governmental order, the employees engaged in the laboratory-based research cannot perform their work while the facility is closed and are limited to performing administrative tasks during the closure.

In contrast, all employees engaged in computer modeling research are directed to telework, and those business operations are able to continue in a comparable manner. Employer E’s business operations are considered to be partially suspended due to the governmental order because Employer E’s laboratory-based research business operations cannot continue in a comparable manner.

For more information about the Employee Retention Credit (ERC) IRS Notice 2021-20, visit the Internal Revenue Service (IRS) Department of the Treasury, official IRS.gov tax website.

Conclusion and Summary on If a governmental order requires an employer to close its workplace, but the employer is able to continue operations comparable to its operations prior to the closure by requiring employees to telework, is the employer considered to have a suspension of operations? – #15 ERC IRS Notice 2021-20

The answer to Question #15: “If a governmental order requires an employer to close its workplace, but the employer is able to continue operations comparable to its operations prior to the closure by requiring employees to telework, is the employer considered to have a suspension of operations?” was answered in detail above. It was found under section “D. Full or Partial Suspension of Trade or Business Operations in IRS Notice 2021-20. 

Leave a comment below if you have further questions on the Employee Retention Credit (ERC) or for clarifications on If a governmental order requires an employer to close its workplace, but the employer is able to continue operations comparable to its operations prior to the closure by requiring employees to telework, is the employer considered to have a suspension of operations?

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Cover Image Credit: Irs.gov / IRS Notice 2021-20 / Disaster Loan Advisors.

Mark Monroe
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