The Internal Revenue Service (IRS) today issued Notice 2021-23, which provides guidance on changes made to the Employee Retention Credit effective for the first six months of 2021.

The IRS explains that today's guidance covers changes to the credit made by the year-end Consolidated Appropriations Act, 2021, including:

• the increase in the maximum credit amount;
• the 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; and
• new restrictions on the ability of eligible employers to request an advance payment of the credit.

The IRS notes that eligible employers "can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 for the first two calendar quarters of 2021." Employers with an average of 500 or fewer full-time employees can request advance payment of the credit.

The IRS says it will soon issue additional guidance for eligible employers covering wages paid in the last half of 2021.

• 17-page text of Notice 2021-23
• IRS press release

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