What Factors Should Be Considered In Determining If An Employer Is Able To Continue Operations Comparable To Its Operations Prior To Closure Such That The Employer’s Operations Are Not Considered To Have Been Fully Or Partially Suspended Due To A Governmental Order? – #16 ERC IRS Notice 2021-20

October 18, 2022 Leave a comment

Question #16:
What factors should be considered in determining if an employer is able to continue operations comparable to its operations prior to closure such that the employer’s operations are not considered to have been fully or partially suspended due to a governmental order?

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 #16, What factors should be considered in determining if an employer is able to continue operations comparable to its operations prior to closure such that the employer’s operations are not considered to have been fully or partially suspended due to a governmental order?, can be found below.

ERC IRS Notice 2021-20 Question #16:

D. Full or Partial Suspension of Trade or Business Operations

What factors should be considered in determining if an employer is able to continue operations comparable to its operations prior to closure such that the employer’s operations are not considered to have been fully or partially suspended due to a governmental order?

The following factors should be considered in determining if an employer is able to continue comparable operations, although additional factors may be considered as well if relevant:

(1) Employer’s telework capabilities. Determine whether an employer has adequate support (IT and otherwise) such that operations can continue via work from another location.

(2) Portability of employees’ work. Determine the amount of portable work, or work otherwise adaptable to be performed from a remote location, within an employer’s trade or business operations.

(3) Need for presence in an employee’s physical work space. Evaluate the role that the employer’s physical work space plays in an employer’s trade or business (may be critical and necessary, beneficial but not necessary, or merely convenient). If the employer’s physical work space is so critical to its trade or business operations that tasks central to the trade or business’s operations are unable to be performed remotely, then this factor alone indicates that the employer is not able to continue comparable operations. Examples of workspace that are critical include laboratories or manufacturing involving special equipment or materials that cannot be accessed or operated remotely.

(4) Transitioning to telework operations. If an employer can conduct comparable operations via telework, but the employer’s operations did not previously allow for telework, or allowed for only minimal telework, then some adjustment period is expected, and, generally, the employer’s operations are not considered partially suspended during that period. However, if an employer incurs a significant delay (for example, beyond 2 weeks) in moving operations to comparable telework (for example, implementing telework policies or providing employees with equipment to telework), then the employer’s trade or business operations may be deemed subject to a partial suspension during that transition period.

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 What factors should be considered in determining if an employer is able to continue operations comparable to its operations prior to closure such that the employer’s operations are not considered to have been fully or partially suspended due to a governmental order? – #16 ERC IRS Notice 2021-20

The answer to Question #16: “What factors should be considered in determining if an employer is able to continue operations comparable to its operations prior to closure such that the employer’s operations are not considered to have been fully or partially suspended due to a governmental order?” 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 What factors should be considered in determining if an employer is able to continue operations comparable to its operations prior to closure such that the employer’s operations are not considered to have been fully or partially suspended due to a governmental order?

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

Mark Monroe
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