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The Employee Retention Credit (“ERC”) is a refundable payroll tax credit for wages paid and health coverage provided by employers whose operations were either fully or partially suspended due to a COVID-19-related governmental order, or that experienced a significant reduction in gross receipts.
The Consolidated Appropriations Act, 2021 (“Act”) significantly expanded the ERC. Notably, the Act made a retroactive change to the ERC, applicable from March 13, 2020, that may allow employers that received PPP loans to qualify for the ERC with respect to wages that are not paid with proceeds from a forgiven PPP loan. In addition to the retroactive change, the following changes to the ERC apply prospectively from January 1 to June 30, 2021:
- The ERC rate is increased from 50% to 70% of qualified wages and the limit on per-employee wages is increased from $10,000 for the year to $10,000 per quarter.
- The gross receipts eligibility threshold for employers is reduced from a 50% decline to a 20% decline in gross receipts for the same calendar quarter in 2019.
- The 100-full time employee threshold for determining “qualified wages” based on all wages paid to employees is increased to 500 or fewer full-time employees.
- The credit is available to all industries and company types, including non-profit entities.
After this webcast, you will be able to:
- Define the new ERC expanded and enhanced provisions.
- Determine how the updated ERC provisions may impact their business.
- Evaluate the eligibility to receive ERC for 2020 and 2021 qualifying wages.
- Understand process and resources to help monetize the credit.