​PPP and ERC: How New IRS Guidance Could Benefit Your Business

The IRS recently released some new “safe harbor” Employee Retention Credit guidance. Taxpayers can now exclude certain kinds of COVID-19 relief funding from their gross receipts when testing for eligibility to receive ERC.

The specific types of relief the IRS mentioned includes:

• Loan Forgiveness for PPP first or second draw funds
• Shuttered Venue Grant
• Restaurant Revitalization Funds

In other words, if your business or organization received PPP money or funds from the two other mentioned relief programs, you don’t have to “count” that money when determining if you’re eligible for ERC.

The guidance is specific about what sources of funding can be excluded. So, it’s likely other COVID funding — like the Provider Relief Fund for healthcare providers or any economic relief grants issued by your state or local governments — shouldn’t be excluded.

Another change affects start-up businesses that began operating during the pandemic. If those companies meet the necessary criteria, they could be eligible for ERC in the third and fourth quarters of 2021, regardless of their gross receipts.

We encourage you to check with your financial advisor to see if you qualify for ERC, even if you didn’t previously. A handful of our clients who weren’t previously eligible will now be receiving funds.

Let us know if you have questions about ERC or any other COVID-19 relief funding.

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.