The Employee Retention Credit (ERC) has been valuable for some employers, however, many have found it difficult to determine eligibility based on government ordered shutdown rules. One industry in which the credit is being underutilized, is the healthcare industry.
Most businesses in the healthcare industry were deemed “essential businesses”. As a result, they did not utilize the ERC if they did not meet the gross receipts test. However, the IRS issued FAQs that provide examples of essential businesses that may be eligible to claim the credit.
FAQ #30 explains that an essential business may qualify for partial suspension if more than a nominal portion of its operations are suspended by government order. FAQ #34 states that if an employer is closed by a government order for only certain purposes but remains open for other purposes, this qualifies as a partial suspension. Many state and local jurisdictions implemented official restrictions against elective procedures, which could qualify many medical practices for the ERC under the partial shutdown by government order requirement. For more detail, please refer to this handy ERC GUIDE.
If you believe your business may qualify for the ERC for either 2020 or 2021, contact our tax professionals today.
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