Emmer’s efforts pay off with new IRS guidance on Employee Retention Credit

Efforts by U.S. Rep. Tom Emmer (R-MN) successfully led to new federal flexibility for employers who continue to pay their employees during the pandemic.

“I appreciate the swift work of this administration to provide more certainty to employers who are just trying to weather this storm and keep their employees paid,” Rep. Emmer said on May 1.

The Internal Revenue Service (IRS) last week issued guidance allowing employers to qualify for the Employee Retention Credit under varying state and local guidance and recommendations following an April 10 letter Rep. Emmer led with 27 other members of Congress.

The Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security (CARES) Act encourages businesses to keep employees on their payroll. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19, according to the IRS guidance.

In his initial letter, Rep. Emmer told U.S. Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig that the CARES Act was unclear about which employers would qualify for the Employee Retention Credit.

The new IRS guidance now stipulates that eligible employers for the Employee Retention Credit are those who carry on a trade or business during calendar year 2020, including tax-exempt organizations, that either fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or experience a significant decline in gross receipts during the calendar quarter.

Governmental employers are not eligible employers for the credit, however, tribes or tribal entities may be if they operate a trade or business, according to the guidance, which adds that self-employed individuals are not eligible for the credit for their own self-employment earnings, though they may be able to claim the credit for wages paid to their employees.

“The CARES Act provided for a variety of support mechanisms for employees and individuals during this crisis,” said Rep. Emmer. “This additional guidance will help employers determine whether they will qualify for this credit, and help countless Americans remain employed.”