Question #35:
May a large eligible employer claim an employee retention credit for an increase in the amount of wages it paid its employees during the time that employees are not providing services?
Found under the G. Qualified Wages 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 #35, May a large eligible employer claim an employee retention credit for an increase in the amount of wages it paid its employees during the time that employees are not providing services?, can be found below.
ERC IRS Notice 2021-20 Question #35:
G. Qualified Wages
May a large eligible employer claim an employee retention credit for an increase in the amount of wages it paid its employees during the time that employees are not providing services?
No. For large eligible employers, qualified wages paid to an employee may not exceed what the employee would have been paid for working an equivalent duration during the 30 days immediately preceding the commencement of the full or partial suspension of the operation of the trade or business or the first day of the calendar quarter in which the employer experienced a significant decline in gross receipts. For a variable hour employee, the amount paid for working an equivalent duration during that 30-day period may be determined using any reasonable method. The method(s) that the Department of Labor has prescribed to determine the amount to pay an employee with an irregular schedule who is eligible for paid sick leave under the FCRA would be considered reasonable for this purpose.
Example: Employer F, a large eligible employer operating a grocery store chain, is subject to a governmental order limiting store hours. In response, Employer F has reduced the hours its employees work, but increases the rate of pay for those employees who continue to provide services by $2 an hour. Only the amounts paid to employees for time they are not providing services, and at the rate of pay in effect prior to the increase, would be considered qualified wages.
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 in May a large eligible employer claims an employee retention credit for an increase in the amount of wages it paid its employees during the time that employees are not providing services? – #35 ERC IRS Notice 2021-20
The answer to Question #35: “May a large eligible employer claim an employee retention credit for an increase in the amount of wages it paid its employees during the time that employees are not providing services?” was answered in detail above. It was found under section “G. Qualified Wages” in IRS Notice 2021-20.
Leave a comment below if you have further questions on the Employee Retention Credit (ERC) or for clarifications in May a large eligible employer claims an employee retention credit for an increase in the amount of wages it paid its employees during the time that employees are not providing services?
Employee Retention Tax Credit (ERTC): Expert Assistance to Claim Your Business ERC Credit
Up to a $26,000 ERC Refund from the IRS for Each Employee
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.
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Cover Image Credit: Irs.gov / IRS Notice 2021-20 / Disaster Loan Advisors.
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