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When read together, Notice 2021-20 and Notice 2021-23 provided employers with information to assist On the other hand, the IRS takes the position that FAQs are non-binding and cannot be relied on as authority for defending penalties under Treas. The Journal of Accountancy is now completely digital. The new guidance amplifies Notice 2021-20 (see Tax Alert 2021-0513) by incorporating the changes made by Section 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Disaster Relief Act), which apply on a prospective basis for qualified wages paid in the first two quarters of 2021. The Notice indicates that the records should be maintained for at least four years. REGISTRATION PROCEDURES . ), Notice 2021-20 formalizes previously issued guidance that had explained that a business whose workplace was closed by government orders was not considered suspended if it could continue operations comparable to its operations prior to the closure[. Maximum Amount of Employers Employee Retention CreditQuestion 29G. Prior IRS guidance regarding ERCs came via FAQs, which are non-binding and subject to change. <> There was a problem submitting your feedback. Under the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), Congress retroactively made changes to the ERC, as we previously discussed. According to a related IRS releaseIR-2021-48 (March 1, 2021)the guidance in Notice 2021-20 is similar to the information in the prior FAQs under the employee retention credit, but includes clarifications and describes retroactive changes applicable to 2020, primarily relating to expanded eligibility for the credit. Providing additional guidance related to partial closures of businesses, including: Factors showing an employers operations have been fully or partially suspended, and factors showing a government order causing a partial suspension of operations. ), An eligible employer that received a PPP loan and did not claim the employee retention credit may file a Form 941-X for the relevant calendar quarters in which the employer paid qualified wages, but only for qualified wages for which no deemed election was made. H. Allocable Qualified Health Plan Expenses. For example, the IRS FAQs related to ERCs specifically state that they may not be relied upon as legal authority. Even though many of the FAQ answers are not substantively changed in Notice 2021-20, by issuing a formal notice, the IRS has provided taxpayers with greater certainty regarding the decision to claim ERCs. Those factors include: Sometimes an employers operations are modified due to a government order involving occupancy restrictions. Section 2301 of the CARES Act allows a credit (employee retention credit or credit) against applicable employment taxes for eligible employers, including tax-exempt organizations, that pay qualified wages, including certain health plan expenses, to some or all employees after March 12, 2020, and before January 1, 2021.