Employee Retention Credits: Career Colleges & Schools

Please note: This blog is current to the date of its publication, Thursday, March 4. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.

SST recently published a blog addressing PPP2 loans and Employee Retention Credits (ERCs). Since then, the Internal Revenue Service (IRS) has issued a number of Frequently Asked Questions (FAQs) clarifying these updates.

In the previous post, we highlighted that private-sector businesses and tax-exempt organizations are entitled to claim ERCs if they carried on a trade or business during 2020 and met one of the following conditions:

  • Had operations that were fully or partially suspended during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel or group meetings (for commercial, social, religious or other purposes)
  • Experienced a significant decline in gross receipts during any calendar quarter in 2020

Career colleges and schools may be entitled to these credits even if they were not fully shut down by government order.

To determine eligibility, consider the following:

  • Was your school forced to suspend operations by government order in your locality?
  • Were you forced to suspend on-site classes for a period of time?
  • If you were able to transfer the classes to an online venue, how long did it take to make the transition?
  • Did you lose students that did not wish to transition to online classes?

A “partial” suspension can still make your organization eligible for the credits. This is an ever-changing and extremely nuanced area, but one that may prove financially significant to your business. Additional resources can be found at IRS.gov, or contact the experts at SST for guidance.

Special thanks to SST senior tax manager Rachel Alexander, CPA, CITP, CEPA, for providing the content for this post.