Gross receipt exclusions clarified for ERC

Paycheck Protection Program forgiveness and certain business and restaurant revitalization grants can be excluded from gross receipts for determining eligibility for the Employee Retention Credit.

Revenue Procedure 2021-33 provides a safe harbor that permits a taxpayer to exclude certain items from “gross receipts” for determining eligibility to claim the ERC under the CARES Act and other recent relief legislation.

Items covered by the safe harbor are:

• The amount of the forgiveness of a PPP loan;
• A grant from the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act; and,
• A restaurant revitalization grant under the American Rescue Plan Act.

Rev. Proc. 2021-33 will appear in the Internal Revenue Bulletin of Aug. 23.