The IRS Office of Chief Counsel has issued a memorandum to clarify the potential applicability of the Employee Retention Tax Credit (ERTC) to businesses that navigated supply chain disruptions. To ensure more accurate and substantiated claims, the memorandum analyzes five different scenarios with supply chain challenges and how those scenarios align with the statutory provisions of COVID-19-related ERTCs. Supply chain disruptions were not included in the statutory language of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); rather, they were first addressed in Question 12 of Notice 2021-20. For businesses seeking accounting services, especially those in South Florida, it is crucial to understand the implications of supply chain disruptions on the Employee Retention Tax Credit (ERTC). The memorandum outlines specific circumstances in which a supply chain disruption could potentially qualify an employer for the ERTC. A supply chain disruption must result in a full or partial suspension of the employer’s business to meet the eligibility criteria for the credit. A mere disruption is insufficient to qualify for the ERTC. Collaborating with experienced Florida CPAs can ensure businesses make well-informed decisions regarding the ERTC, minimizing any potential complications or discrepancies in their claims.
