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ERC Controlled Group determination based on which tax year?

KarimB
Level 1

The Employee Retention Credit rules to aggregate employees from brother-sister companies dictates that controlled group of companies is based on ownership percentages as give in IRC Code 52 and Section 1563.  For 2020 Employee Retention Credit purposes, does this have to be tested based on what the ownership was in 2019 or in 2020?

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qbteachmt
Level 15

I found this article for you that organizes the IRS Q&A nicely:

https://rsmus.com/what-we-do/services/tax/compensation-and-benefits/employee-benefits-programs/irs-u...

The only requirement I can think of that meets what you seem to be asking is the one for how large a staff the employer had in 2019 vs the impacted year which is the latter 3/4 of 2020. 2019 is not the impacted year.

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KarimB
Level 1

Correct. I've also only seen the year (2019) discussion related to number of full time employees.  I have not seen anything related to the year to be tested for shareholder ownership.  I have a company that qualifies on the basis of 2020 ownership but not 2019 ownership. 

If anyone can find anything on this that would be much appreciated. 

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qbteachmt
Level 15

My understanding is that the 2019 lookback is for purposes of wage qualification. Ownership is part of the 2020 treatment.

Remember that 2020 is the year we are impacted.

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