Supply-Chain Snags Don’t Trigger Employee Retention Credit: IRS

Employers who were hampered by supply-chain disruptions during Covid-19 but weren’t actually ordered to shut down aren’t eligible for a pandemic-era tax credit aimed at encouraging companies to keep employees on their payroll, the IRS said.

The statutory language that enacted the employee retention credit doesn’t cover supply-chain disruptions, the IRS Office of Chief Counsel said in a legal advice memorandum, dated June 30 and released Thursday. Such a disruption by itself “does not rise to the level” of a full or partial suspension of a company’s operations that’s required to be eligible for the credit, the IRS said, ...