LDR Issues ERC Guidance

LDR Revenue Ruling:
Application of 280C Deduction to Federal Employee Retention Credit  

The purpose of this revenue ruling is to provide guidance to employers with regard to the Federal Employee Retention Credit (ERC), as authorized by Section 2301(e) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Additionally, the revenue ruling addresses the applicability of LA R.S. 47:293(9)(a)(ix) and 47:287.73(C)(4), which allows a taxpayer a deduction for any amounts disallowed pursuant to Internal Revenue Code (IRC) Section 280C. IRC Section 280C IRC Section 280C(a) requires an employer to reduce a deduction for the portion of wages or salary equal to the sum of certain credits determined under the Internal Revenue Code.  

These tax credits include:

• the Indian Employment Credit,
• the Military Differential Wage Payment Credit,
• the Employer Credit for Paid Family and Medical Leave,
• the Work Opportunity Tax Credit, and
• the Empowerment Zone Employment Credit.

Each of these tax credits is accumulated as part of the General Business Credit available under IRC Section 38 and, as such, is applicable against federal income tax.

Read LDR RR 22-001 including footnotes for full details. 

Questions about the content of this Alert should be directed to LCPA State Government Relations Director Linda Babin.