EMPLOYEE RETENTION CREDITS
DID YOU RECEIVE PPP#1 AND/OR PPP#2?
NOW THERE IS EVEN MORE CASH AVAILABLE FOR COMPANIES AFFECTED BY COVID-19
ACT NOW…..GET IN THE IRS REFUND LINE BEFORE THE RUSH
December 27, 2020, the second Coronavirus relief package was signed into law. This law contains significant enhancements to the Employee Retention Credit (ERC) enacted under the CARES Act. Then on March 12, 2021, President Biden signed the “Rescue Act” further extending the ERC through December 31, 2021.
ERC is Available even if Company Received PPP Loan
Under the CARES Act, a company that received a Paycheck Protection Program (PPP) loan was not eligible for the ERC. However, the new law states that a company that receives a PPP loan is no longer prohibited from claiming the ERC; however, an ERC may not be claimed for wages paid with the proceeds of a PPP loan that have been forgiven (no double-dipping). This change is retroactive for wages paid after March 12, 2020, which means a company that received a PPP loan in 2020 or 2021 and paid qualified wages in excess of the amount of the forgiven PPP loan used to pay wages is also eligible to claim the ERC in those years.
Eligibility for the ERC
If a company had operations that were either fully or partially suspended by a government order related to COVID-19 during 2020 or 2021, it is eligible for the ERC.
Other ways to qualify are via quarterly revenue tests:
- For 2020, companies are eligible for the ERC if, in any quarter, their gross receipts were less than 50% of their gross receipts in the same quarter in 2019.
- For 2021, companies are eligible for the ERC if, in any quarter, their gross receipts were less than 80% of their gross receipts in the same quarter in 2019 (or if their gross receipts for the prior quarter were less than 80% of their gross receipts compared to the corresponding quarter in 2019).
Period Available and Amount of ERC
The ERC is currently available for wages paid from March 12, 2020 through December 31, 2021. For 2020, the amount of the ERC is equal to 50% of the qualified wages paid to an employee and it’s capped at $5,000 per employee for the year. For 2021, the ERC amount is increased to 70% of qualified wages paid to an employee and it is capped at $7,000 per employee for EACH quarter.
Our ERC Services experts, made up of attorneys and CPAs, track the thousands of federal, state, local and county orders related to COVID-19 and form legal positions documenting qualification for full or partial suspensions, in addition to calculating and capturing the credits and providing IRS audit defense.