In discussions surrounding the Employee Retention Credit (ERC), a prevalent misconception revolves around the gross receipts test and the notion of demonstrating a more than nominal impact on operations. Despite frequent encounters with this misunderstanding among CPAs, tax attorneys, and business owners, it’s crucial to clarify that there’s no 10% revenue reduction rule outlined in the IRS notices governing the ERC program. The confusion seems to stem from various articles and circulating information that lack comprehensive understanding or senior-level review, leading to misconceptions about eligibility criteria.

To establish eligibility for the ERC, there are primarily two routes: a qualified decrease in gross receipts and a partial suspension of operations. While confusion often arises regarding the latter, the IRS notices and guidelines are explicit about the absence of a 10% decline in gross receipts as a requirement for eligibility. The focus is on assessing the reduction in an employer’s ability to provide goods or services, rather than solely on revenue figures.

Navigating the nuances of these rules requires careful analysis and documentation, especially concerning the partial suspension test. Understanding the specific government mandates impacting a business and how they influence operations is paramount. While ERC eligibility involves complex considerations, our team of experienced tax professionals is here to provide guidance and support. Schedule a consultation to explore how these rules apply to your unique circumstances and determine the best course of action.