Guidance for employers claiming the Employee Retention Credit for first two quarters of 2021

IRS Notice 2021-23 provides guidance for employers claiming the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act).

It explains the changes to the Employee Retention Credit for the first two calendar quarters of 2021, including:

  • Increase in the maximum credit amount

  • Expansion of the category of employers that may be eligible to claim the credit

  • Modifications to the gross receipts test

  • Revisions to the definition of qualified wages

  • Restrictions on the ability of eligible employers to request an advance payment of the credit

See the following IRS news release for more details about claiming the credit for the first and second quarters of 2021.

Note: Under the American Rescue Plan Act of 2021, enacted March 11, 2021, the Employee Retention Credit is also available to eligible employers for wages paid during the third and fourth quarters of 2021. The IRS will provide further guidance on claiming these credits soon.

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