The Treasury and IRS are providing a gross receipts safe harbor for employers seeking to claim the Employee Retention Credit (ERC), allowing the exclusion of certain amounts in determining eligibility for the credit:
- 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; and
- Restaurant Revitalization Grants under the American Rescue Plan Act of 2021.
You can elect to apply the safe harbor by excluding these amounts solely for determining whether you are an eligible employer for a calendar quarter.
Revenue Procedure 2021-33 requires employers to apply the safe harbor consistently for determining eligibility for the ERC. The employer must exclude the amounts from their gross receipts for each calendar quarter in which gross receipts are relevant to determining eligibility to claim the ERC. Those claiming the credit must also apply the safe harbor to all employers treated as a single employer under the aggregation rules.
You are not required to apply this safe harbor, and the safe harbor does not permit the exclusion of these amounts from gross receipts for any other federal tax purpose.
Revenue Procedure 2021-33, updates and amplifies guidance provided in Notice 2021-20, which addressed the ERC as it applies to qualified wages paid after March 12, 2020, and before January 1, 2021, Notice 2021-23, which addressed the ERC as it applies to qualified wages paid after December 31, 2020 and before July 1, 2021, and Notice 2021-49, which addressed the ERC as it applies to qualified wages paid after June 30, 2021 and before January 1, 2022