Employee Retention Credit (ERC)
Our previous newsletter indicated the potential early termination of the Employee Retention Credit (ERC) due to a provision in the Infrastructure bill passed by the Senate in August. The House of Representatives passed the Infrastructure Investment and Jobs Act on November 5, 2021, accepting the amendments the Senate had made to the bill. The President is expected to sign the bill.
The legislation makes wages paid after Sept. 30, 2021, ineligible for the credit (except for wages paid by an eligible recovery startup business).
Recovery startup businesses would remain eligible through December 31, 2021.
If you have not determined if you are eligible for the ERC, you still have time. Generally, employers may file an amended 941-X within 3 years of the date the 941 was filed or 2 years from the date you paid the tax, whichever is later.
ERC Overview – Are you eligible?
The American Rescue Plan Act of 2021 modifies the employee retention credit first created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, then extended and expanded under the Consolidated Appropriations Act, 2021.
In general, the amount of the credit is 70% of qualified wages paid to an employee up to $10,000 per quarter.
Generally, eligible employers include:
- An employer whose trade or business is wholly or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease (COVID-19);
- An employer that experiences a decline in gross receipts
- 50% decline in gross receipts in a calendar quarter in 2020 compared to the same quarter in 2019
- 20% decline in gross receipts in Q1-Q3 of 2021 compared to the same quarter in 2019
- A recovery startup business (limited to $50,000 per calendar quarter)
- not otherwise an eligible employer
- began carrying on a trade or business after February 15, 2020;
- Average annual gross receipts for the three tax years preceding the quarter in which it claims the credit of no more than $1 million (with rules under Sec. 448(c)(3) for their calculation if the entity has not been in existence for three years and by reference to the entity’s predecessor).
If you are unsure if you are eligible, reach out to email@example.com for a complimentary consultation.
American Rescue Plan Act funding from states, cities, and counties
The COVID-19 pandemic relief bill, the American Rescue Plan Act (ARPA), provided more than $350 billion in flexible funding to state, local, territorial and Tribal governments in efforts to stabilize the American economy.
The funding was explicitly designed to help keep people employed, reopen schools, vaccine distribution efforts, and maintain other vital services.
States and counties are beginning to announce how the funds will be spent. We expect there will be new programs announced regularly through year-end.
We will work to keep you updated as we learn more.
Some of the programs we have recently learned about that will help our clients are below:
- Early Childhood Education COVID-19 Funding for childcare providers
NEW JERSEY (CAMDEN COUNTY)
- Announced in Oct – Child care provider grants ranging from $20,000-$80,000
- Public Health and Healthcare Provider
Paycheck Protection Program
Reminder: If your loan is $150,000 or less, you may be eligible to apply for direct forgiveness through SBA.
- Find out if your lender is participating.
The deadline to apply for forgiveness is ten months after the last day of your covered period.
If you are eligible for the Employee Retention Credit, we recommend preparing an analysis of wages used in each program before applying for forgiveness to ensure the maximum amount of relief across both programs. Reach out to firstname.lastname@example.org with questions.
We have had a dedicated team in place for over a year to ensure our clients secure the maximum amount of eligible relief while complying with the cross eligibility rules of COVID19 relief programs. If you are interested in a complimentary phone call to discuss your eligibility or questions on any of the COVID19 relief programs, please email email@example.com with your information.