One element that can qualify a taxpayer for the Employee Retention Credit (“ERC”) is to experience a full or partial suspension of business operations due to a governmental order. Some situations are clear cut while others are in a gray zone.
Facts and circumstances need to be considered in determining whether a business is partially suspended. Here’s a short list of examples and the status of each:
1. An employer’s suppliers cannot deliver critical goods due to a full or partial shutdown impacting the employer’s business operations. FULL OR PARTIAL SUSPENSION
2. An employer’s office, closed due to governmental orders yet operating effectively teleworking, is not considered fully suspended. Aspects of the business that cannot be performed via teleworking involve a nominal part of the business. NO PARTIAL SUSPENSION
3. When a governmental order closes one aspect of a business allowing other functions to continue, but the operating functions comprise only a nominal portion of the business, the employer is partially shut down. For example, in the restaurant industry, in-person dining was fully suspended but takeout was allowed. PARTIAL SUSPENSION
