Bergman Leads Fight Against IRS Guidance Punishing Small Business Owners With Families

Today, Rep. Jack Bergman sent a letter to the IRS opposing recent guidance discriminating against business owners with families and demanding immediate action to change this misguided rule.

On August 4th, the IRS issued guidance on the Employee Retention Credit (ERC) – a refundable tax credit that has helped thousands of businesses avoid laying off employees since the start of the pandemic. Rep. Bergman supported the creation of the ERC as part of the CARES Act in March of 2020. Unfortunately, the recent IRS guidance makes it so that wages to business owners or their spouses only qualify for the ERC if the business owner doesn’t have any living siblings, parents, or children.

This illogical guidance clearly goes against the intent of Congress and arbitrarily punishes Americans with families. The letter from Congressman Bergman is an important first step in efforts to overturn this unfair bureaucratic decision.

The full text of the letter can be found here or below:

Dear Commissioner Rettig,

I write to express my concerns with the recent IRS Guidance on the Employee Retention Credit under Section 3134 of the Code and on Miscellaneous Issues Related to the Employee Retention Credit (Notice 2021-49). Specifically, I object to language that prevents wages paid to a majority owner of a corporation from qualifying under the Employee Retention Credit (ERC) solely if the owner has a direct family member.

Section IV, Subsection D of Notice 2021-49 addresses whether wages paid to an employee who is a majority owner of a corporation, or to their spouse, may be treated as qualifying wages under the ERC. As written, this guidance excludes wages to majority owners or spouses only if “the majority owner has a brother or sister (whether by whole or half-blood), ancestor, or lineal descendant.” As a result, the only business owners that can take advantage of this credit are those who are orphaned and have no children or siblings. Meanwhile, those with families are cut off from this support, despite having an equal or greater need for financial relief through the ERC.

The distinction made in your guidance is entirely illogical, goes against the intent of Congress, and arbitrarily punishes Americans with families. I, therefore, request further explanation as to the statutory rationale for this decision and urge you to take action as needed to correct this absurd bureaucratic move. Thank you for your prompt attention to this critical request. I stand ready to provide any additional information needed.


Jack Bergman

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