New Safe Harbor for ERC Gross Receipts Calculation

This month, the IRS announced a new safe harbor provision that allows employers to exclude certain amounts received from other pandemic relief programs in determining whether it qualifies for the Employee Retention Credit (ERC) based on a decline in gross receipts.

Revenue Procedure 2021-33 allows employers to exclude these items from gross receipts for determining ERC eligibility:

• The forgiveness of Paycheck Protection Program (PPP) loans

• Shuttered Venue Operators Grants

• Restaurant Revitalization Fund grants

Employers may qualify for the ERC using either of two tests: a decline in gross receipts or being fully or partially shutdown by a government-mandated order. The gross receipts test measures an employer’s quarterly gross receipts against the same period in 2019.

The IRS said the safe harbor is needed because Congress intended employers to be able to participate in the pandemic-relief programs mentioned above concurrently, provided the same wage dollars are not paid for or reimbursed by multiple programs – considered “double-dipping” on wages.

Schreiber Accounting and Advisory can help you understand whether you qualify for the Employee Retention Credit and help you file the appropriate payroll tax returns to claim it. Contact the firm for more information.

Material discussed is for informational purposes only. It is not to be interpreted as investment, tax, or legal advice. Individual situations vary, and this information should only be relied upon when coordinated with individual professional advice. Not all taxpayers will receive a refund.