Update: Supply Chain Disruption and the Employee Retention Tax Credit

July 28, 2023

The IRS Office of Chief Counsel has issued a memorandum to clarify the potential applicability of the Employee Retention Tax Credit (ERTC) to businesses that navigated supply chain disruptions. To ensure more accurate and substantiated claims, the memorandum analyzes five different scenarios with supply chain challenges and how those scenarios align with the statutory provisions of COVID-19-related ERTCs. Supply chain disruptions were not included in the statutory language of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); rather, they were first addressed in Question 12 of Notice 2021-20. The memorandum outlines specific circumstances in which a supply chain disruption could potentially qualify an employer for the ERTC. A supply chain disruption must result in a full or partial suspension of the employer's business to meet the eligibility criteria for the credit. A mere disruption is insufficient to qualify for the ERTC. AM 2023-05.


To read about the 5 different scenarios and the law as it pertains to this issue, please read the official memo given by the IRS.




This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.

Share Post:

By Meyers Brothers Kalicka May 7, 2026
The One Big Beautiful Bill Act introduced Trump Accounts, a new tax-advantaged savings option designed to help children build long-term wealth. With potential government seed funding, tax-deferred growth and contribution opportunities from families and employers, these accounts create new planning opportunities.
By Meyers Brothers Kalicka April 30, 2026
Profits interests can be a tax-efficient way for businesses structured as partnerships and limited liability companies to attract and retain talent when cash compensation is limited.
By Meyers Brothers Kalicka April 23, 2026
Nonprofits with investment portfolios should consider adopting effective spending policies. There is no one optimal policy that should be followed, the best option will vary on a variety of factors.
Show More