There was a lot of ERC news on August 10th.
Congressman Jack Bergman (R-MI) wrote a letter to IRS Commissioner Rettig complaining about IRS’s recent ERC guidance in Notice 2021-49:
“I write to express my concerns with the recent IRS Guidance on the Employee Retention Credit under Section 3134 of the Code and on Miscellaneous Issues Related to the Employee Retention Credit (Notice 2021-49). Specifically, I object to language that prevents wages paid to a majority owner of a corporation from qualifying under the Employee Retention Credit (ERC) solely if the owner has a direct family member…. The distinction made in your guidance is entirely illogical, goes against the intent of Congress, and arbitrarily punishes Americans with families.”
Unfortunately, the illogical distinction is a direct result of how Congress wrote the legislation. Absent a legislative change, it’s unlikely the IRS has the ability to make a change.
However, IRS did just make an allowance that contradicts the Internal Revenue Code. In Rev. Proc. 2021-33, IRS says that in order to align with congressional intent, employers may ignore proceeds from forgiven PPP loans, shuttered venues grants, and restaurant revitalization grants when calculating gross receipts for employee retention credit eligibility. This has been an open question since Congress allowed employers to utilize both the ERC and PPP last December.
Finally, the U.S. Senate passed H.R. 3684, the bipartisan infrastructure bill, including an early termination of the ERC at the end of September. The bill has not yet been considered in the House.