Please note: This blog is current to the date of its publication, Friday, July 17. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.
While there has recently been significant focus on the Paycheck Protection Program (PPP) and how to maximize loan forgiveness through that specific program, nonprofit organizations and small businesses that did not receive funding through the PPP could be eligible for COVID-19 Employee Retention Credits (ERC) available through the Coronavirus Aid Relief and Economic Security (CARES) Act. Below, our experts have outlined a brief overview of the ERC program:
- The ERC is a refundable payroll tax credit for 50% of up to $10,000 in qualified wages per employee paid between March 13 and Dec. 31, 2020 ($5,000 per employee, per year)
- Eligible employers include business owners or tax-exempt organizations that experienced one of the following scenarios in 2020:
- A full or partial suspension of operations during any calendar quarter due to government mandates
- A significant decline in gross receipts of more than 50% in relation to the same quarter in 2019
- Qualified wages depend on how many employees an eligible employer has and include wages paid to employees who were not providing services due to suspended operations or a significant decline in gross receipts
- For employers who averaged more than 100 fulltime employees (FTEs) during 2019, qualified wages generally include wages up to the amount that the employee would have been paid for working an equivalent duration during the 30-days immediately preceding the period of economic hardship
- For employers who averaged 100 or fewer FTEs during 2019, qualified wages generally include wages paid to any employee regardless of whether or not employees are providing service
- Eligible employers can access these funds by reducing the federal employment tax deposit or requesting an advance payment by filing Form 7200
- If an eligible employer chooses not to claim the ERC and later decides to claim the credit for a prior quarter, they may do so by filing Form 941X
The IRS has issued FAQs related to the ERC, and SST is here to help our clients determine eligibility and maximize funding through this program. For more information or to get started, schedule a consultation today.
Thanks to SST Partner Emily Cook for providing the content for this post. Click here to learn more about Emily.