In Issue IR-2021-67, the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury) issue safe harbor guidance to qualified employers. Paycheck Protection Program (PPP) forgiveness is addressed as well as certain business and restaurant revitalization grants that are permitted to be excluded from gross receipts for determining eligibility for the Employee Retention Credit.
Safe harbor provisions are spelled out in Revenue Procedure 2021-33. Permitted amounts follow:
The amount of the forgiveness of a Paycheck Protection Program (PPP) Loan
Shuttered Venue Operators Grants under the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act
Restaurant Revitalization Grants under the American Rescue Plan Act of 2021
Employers are not required to apply the safe harbor. Employers may elect to utilize a safe harbor by excluding certain amounts in determining whether they qualify for eligibility in calendar quarters for purposes of claiming the ERC on its employment tax return. The safe harbor does not however, permit the exclusion of these amounts from gross receipts for any other federal tax purpose. The employer claiming a credit must apply the safe harbor to all employers treated as a single employer under the aggregation rules.
SPS/GZ will continue to closely monitor pending legislation related to the ERC. Check back for additional information as updates will be made available. SPS/GZ is a full-service tax reporting firm that provides personalized service and exceptional support, utilizing state-of-the-art technology to create and e-file Forms 1099, Affordable Care Act tax forms, and Forms 3921 and 3922. Reach out today at email@example.com or call at (888)375-3049.