- March 19, 2021
- Posted by: Andy Scheu
- Categories: COVID19 Resources, Human Resources
The Employee Retention Credit (ERC) program has been expanded through the Economic Aid Act, making the credit more available to employers who meet certain criteria, including those who received a PPP loan. The ERC allows for employers to claim 50% of the first $10,000 paid to each employee for each quarter of 2020, and 70% of the first $10,000 paid to each employee each quarter for 2021. In addition, businesses are able to receive these credits as an advance by filing Form 7200.
Who is Eligible?
Generally, there are two ways businesses can qualify for the employee retention credit:
- A reduction in gross receipts for a quarter in 2020 and/or 2021 compared to the same quarter in 2019.
- A government mandate forcing a business to shut down or limit capacity had more than a nominal effect on that business.
For 2020, businesses that saw gross receipts reduced by over 50% during any quarter (after March 12, 2020) compared to the same quarter in 2019 are eligible to receive employee retention credits. For 2021, businesses that saw gross receipts for Q4 of 2020, or Q1 or 2021 reduced by over 20% compared to 2019 are eligible to receive the credits. Businesses may claim the credit for each quarter of 2020 (after March 12, 2020) through Q3 of 2021, so long as gross receipts remain at less than 20% compared to the same quarter in 2019.
Even if a business’ revenue was not impacted by the pandemic, they may still be eligible if a government mandate forced them to shut down or limit capacity. Even essential businesses may be eligible if they can show that the mandate had more than a nominal effect (10% compared to the same period in 2019) on their business in terms of gross receipts or hours worked by their staff.
Lastly, if a business became operation after Feb. 15th of 2020, they may be able to qualify as a Recovery Startup Business. Learn more about this qualifier here!
How Are Employee Retention Credits Claimed?
Most employers will account for any employee retention credit that they are eligible for through Form 941. Businesses that would like to retroactively claim employee retention credits for 2020 will need to file amended applicable employment tax returns. Form 7200 will need to be filed in order to receive credits as an advance.
Time & Pay is now assisting eligible companies claim employee retention credits for 2020 and 2021. We will help calculate the credit available, and file all amended returns in order to help claim this financial assistance. Unlike other firms, we do not charge a percentage of the credit that we help claim. Our fees are based on the number of employees on payroll within each qualifying quarter. For more information, or to start the process, contact us today!