In late December of 2020, Congress revised refundable credits for businesses that needed to retain employees. This is one of the many relief options available to businesses affected by the pandemic, including refundable credits for retaining employees in both 2020 and 2021. This CARES Act Employee Retention Credit (ERC) expansion creates opportunities for previously excluded recipients of PPP.
Very recently, in March 2021, the government extended the credits for another six months making employers eligible through December 31, 2021.
In order to be eligible, your business must have been fully or partially suspended by government orders OR experienced a reduction in year-over-year gross recipients of 50% in 2020 or 20% in 2021.
The ERC is retroactive to the effective date included in the CARES Act, the 2020 provision:
Employers who received Paycheck Protection Program (PPP) loans may still qualify for the ERC with respect to wages that are not paid for with PPP proceeds.
Specifies the amount of gross receipts for certain tax-exempt organizations
Specifies that group health-plan expenses can be considered qualified wages despite no other wages having been paid to the employee, consistent with IRS guidance.
False. An essential business can qualify for the ERC because gross receipts declined by 20% year-over-year or because its operations are fully or partially suspended because of a government order.
False. The stimulus package passed in December 2020 has always allowed for companies who received PPP funds to also take the ERC!
False. Your company most likely had to perform extra cleaning or sanitizing, installing/utilizing protective equipment, temperature checks, a change in job roles/functions, and more. If your business had to change operations in any way due to governmental orders OR if gross receipts declined by 20% year-over-year, your business qualifies.
False. Your company had to see either a 20% decline in gross receipts OR suspension in operations, not both. Almost every business has been impacted in some way by a national, state, or local governmental order, therefore qualifying the business.
False. Even if you have been profitable, we have helped many companies that were profitable in 2020 receive anywhere from thousands to millions of dollars in credits. This includes grocers, manufacturing, logistics companies, and more. If your business has been impacted in some way by the pandemic, you qualify.
False. Due to recently modified rules, this tax credit applies to tax-exempt organizations if the business operations have been fully or partially suspended due to governmental orders related to COVID-19. Many nonprofit daycares, schools, daycares, counseling centers, ministries, churches, and clubs closed their buildings and/or partially suspended services to comply with government orders and guidelines. This suspension of operations would qualify that organization for the ERC.
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