Question #70:
What records should an eligible employer maintain to substantiate eligibility for the employee retention credit?
Found under the N. Substantiation Requirements 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 #70, What records should an eligible employer maintain to substantiate eligibility for the employee retention credit?, can be found below.
ERC IRS Notice 2021-20 Question #70:
N. Substantiation Requirements
What records should an eligible employer maintain to substantiate eligibility for the employee retention credit?
An eligible employer will adequately substantiate eligibility for the employee retention credit if the employer creates and maintains records that include the following information:
• Documentation to show how the employer determined it was an eligible employer that paid qualified wages, including:
– any governmental order to suspend the employer’s business operations;
– any records the employer relied upon to determine whether more than a nominal portion of its operations were suspended due to a governmental order or whether a governmental order had more than a nominal effect on its business operations;
– any records the employer used to determine it had experienced a significant decline in gross receipts;
– any records of which employees received qualified wages and in what amounts; and
– in the case of a large eligible employer, work records and documentation showing that wages were paid for time an employee was not providing services.
• Documentation to show how the employer determined the amount of allocable qualified health plan expenses.
• Documentation related to the determination of whether the employer is a member of an aggregated group treated as a single employer for purposes of the employee retention credit and, if so, how the aggregation affects the determination and allocation of the credit.
• Copies of any completed Forms 7200 that the employer submitted to the IRS.
• Copies of the completed federal employment tax returns that the employer submitted to the IRS (or, for employers that use third-party payers to meet their employment tax obligations, records of information provided to the third- party payer regarding the employer’s entitlement to the credit claimed on the federal employment tax return).
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 records should an eligible employer maintain to substantiate eligibility for the employee retention credit? – #70 ERC IRS Notice 2021-20
The answer to Question #70: “What records should an eligible employer maintain to substantiate eligibility for the employee retention credit?” was answered in detail above. It was found under section “N. Substantiation Requirements” 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 records should an eligible employer maintain to substantiate eligibility for the employee retention credit?
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Cover Image Credit: Irs.gov / IRS Notice 2021-20 / Disaster Loan Advisors.
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