IRS Sets Limits in PPP, Employee Retention Tax Credit Rules

March 2, 2021, 9:38 PM

Businesses with Paycheck Protection Program loans can finally take advantage of a newly available tax credit for keeping employees on payroll, but IRS rules could narrow how much they can get.

The Internal Revenue Service took a more strict-than-expected stance in several areas of its March 1 guidance. Tax professionals said the guidance could end up limiting the employee retention credit for businesses that have already applied for loan forgiveness. The agency also took a rigid position regarding payroll costs paid for with a forgiven loan—those costs can’t be used to claim the credit, likely curbing the amount businesses...

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