The National Conference of CPA Practitioners (NCCPAP), an organization representing Certified Public Accountants (CPAs) and other tax professionals, announces its call to action against IRS Notice 2021-49.
“Last week, the Internal Revenue Service released Notice 2021-49 in response to repeated requests by the accounting and business communities to provide clarification regarding rules governing the Employee Retention Credit (ERC). In so doing, the IRS issued a damaging blow to those businesses hardest hit by the COVID-19 pandemic—small family-owned businesses.”
The letter continues, “Under this guidance, the wages of the owner and their spouse no longer qualify for an ERC if the owner has ANY CLOSE LIVING RELATIVE, regardless of them being employed by the business. A close relative is defined as your child, sibling, parents, uncle, aunt, niece, nephew, or any in-law. It does not have to be a relative you employ; the existence of any living relative disqualifies a small business owner and their spouse from claiming an ERC on their earnings.”