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  • Writer's pictureAmi Kassar

AmiSight 11/16: A Conflict Is Erupting between Employees and the IRS

A WSJ article last week addressed a conflict between employers and the IRS regarding the eligibility for a pandemic-era tax credit worth up to $26,000 per worker. This credit is based on whether a government order fully or partially suspends business operations. Some employers and tax advisers argue that adhering to Occupational Safety and Health Administration (OSHA) guidelines for worker safety during the pandemic constitutes a "government order" that qualifies them for the tax credit.


However, the IRS disagrees, asserting that OSHA guidelines do not meet the criteria of a government order for the tax credit. The IRS has toughened its stance on audits related to the Employee Retention Credit (ERC), emphasizing rampant fraud and ineligible claims. They've issued a memo outlining their argument against using OSHA guidelines for claiming credit.


While some firms, like Synergy Partners and Stenson Tamaddon, incorporate OSHA guidance in their claims, they also consider other factors like CDC guidance and local orders. Despite the IRS's position, some employers may challenge this in court, while others might withdraw their claims or repay refunds to avoid conflicts with the IRS.


The IRS is cracking down on claims based solely on OSHA guidance and aims to tighten the criteria for the tax credit, challenging employers who argue that compliance with OSHA guidelines qualifies as a government order. This conflict might lead to legal battles, as some employers have differing views on the IRS's strict interpretation.


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