Retailers Ask IRS to Rethink Tax-Credit Rule

As part of the CARES Act passed in April, Congress included an Employee Retention Credit to encourage businesses to keep employees on the payroll during this difficult economic period.

The IRS subsequently issued a list of FAQs on the Employee Retention Credit, in which they interpreted that health care expenses businesses continue to pay for furloughed emloyees do not count as "qualifying wages" toward eligibility for the credit.

RILA sent a letter to Treasury Secretary Mnuchin and IRS Commissioner Rettig requesting they reverse the position stated in the FAQ’s and treat health care expenses as “qualified wages”. House Ways and Means Committee Chairman Richard Neal (D-MA), Senate Finance Committee Chairman Charles Grassley (R-IA), and Ranking Member Ron Wyden (D-OR) also sent a letter to Treasury Secretary Steven Mnuchin seeking reconsideration.

The Wall Street Journal recently wrote in depth about this issue here.



On May 7, the Treasury Department revised its earlier guidance issued on the Employee Retention Credit and will now treat health care expenses paid on behalf of employees who are no longer receiving wages as “qualified wages” towards the credit.

We will continue to follow this issue and provide updates to RILA members as available. For more information, please contact RILA Vice President of Tax Dave Koenig.
  • Public Policy
  • Finance
  • Tax

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