BY THE NUMBERS Employee Retention Tax Credit Revisited Again By LONNIE ROGERS, Tetrick & Bartlett, PLLC T he IRS released an Office of Chief Counsel memorandum dated June 30, 2023, on July 21, 2023. The subject of this memorandum was: Whether an Employer Experienced a Full or Partial Suspension of the Operation of a Trade or Business under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act or Section 3134 of the Internal Revenue Code due to a Supply Chain Disruption. The IRS has clarified that employers who were hampered by supply-chain disruptions during the pandemic but were not shut down are not eligible for an employee retention tax credit aimed at encouraging companies to keep their employees on their payroll. The memorandum states that “A supply chain disruption, by itself, does not rise to the level of a full or partial suspension primarily because no governmental order applies to the employer’s operations.” The guidance does allow the employer to step into the shoes of its supplier for purposes of the suspension test. The supplier must have been subject to a governmental order that causes the supplier to suspend its operations. Scan the QR code to read the full memorandum. https://www.irs.gov/pub/lanoa/am-2023-005.pdf In addition to this further guidance from the IRS, we are seeing increased review procedures being applied to current claims being filed. The IRS issued form 4564 (Information Document Request) to a client for information necessary to determine if they are eligible for the employee retention credit requested on form 941-X. The request must include the following items. 1. Work papers that were used to prepare Form 941-X 2. Documentation that you are an eligible employer for the purposes of the employee retention credit based on either a significant decline in gross receipts or full or partial suspension of operations. The significant decline in gross receipts should include the records used to determine that the organization WVADA News 14
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