IRS and Treasury Provide Gross Receipts Safe Harbor for Employers Claiming the Employee Retention Credit

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.

The most popular way that employers claim the ERC on their employment tax return, is by generally using Form 941, Employers Quarterly Federal Tax Return, or via adjusted employment tax return, Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.

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 or call at (888)375-3049. 

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