Question #39:
May an eligible employer treat payments made to former employees who have terminated employment as qualified wages for purposes of the employee retention credit?
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 #39, May an eligible employer treat payments made to former employees who have terminated employment as qualified wages for purposes of the employee retention credit?, can be found below.
ERC IRS Notice 2021-20 Question #39:
G. Qualified Wages
May an eligible employer treat payments made to former employees who have terminated employment as qualified wages for purposes of the employee retention credit?
Payments, including severance payments or other post-termination payments, made to a former employee following termination of employment are not considered qualified wages for purposes of the employee retention credit. Payments may be considered qualified wages only if the payments are made to an employee while employed by the eligible employer.
Payments made in connection with a former employee’s termination of employment are not qualified wages because they are payments for the past employment relationship and thus are not payments made with respect to an employee during the time for which the employee retention credit may be claimed. Whether an employee has terminated employment is based on all of the facts and circumstances, including whether the employer has treated the employment relationship as terminated for purposes other than the continuation of wage payments.
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 May an eligible employer treat payments made to former employees who have terminated employment as qualified wages for purposes of the employee retention credit? – #39 ERC IRS Notice 2021-20
The answer to Question #39: “May an eligible employer treat payments made to former employees who have terminated employment as qualified wages for purposes of the employee retention credit?” 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 on May an eligible employer treat payments made to former employees who have terminated employment as qualified wages for purposes of the employee retention credit?
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Cover Image Credit: Irs.gov / IRS Notice 2021-20 / Disaster Loan Advisors.