![]() ![]() (2) Has gross receipts for any such quarter or for the immediately preceding quarter that are less than 80% of its gross receipts for the same quarter in 2019.įor 2020 Q2, Q3 and/or Q4 (for Q2, including March 13 - March 31, 2020), an employer can receive a credit equal to 50% of the first $10,000 of Qualified Wages paid per employee in the aggregate for all qualifying quarters. ![]() (1) Fully or partially suspends its operations due to a governmental order limiting commerce, travel, or group meetings due to COVID-19 (employer is eligible to claim ERC for the suspension period), or (2) Had gross receipts for any 2020 quarter that were less than 50% of its gross receipts for the same quarter in 2019. (Employer is eligible to claim the ERC for the quarter with the decline in gross receipts and for the next following quarter eligibility ends for the quarter after the quarter for which gross receipts return to greater than 80% of the gross receipts for the same quarter in 2019 (unless that quarter has its own greater-than-50% decline when compared to the same quarter in 2019).) (1) Fully or partially suspended its operations due to a governmental order limiting commerce, travel, or group meetings due to COVID-19 (Employer is eligible to claim the ERC for the suspension period), or To receive an ERC, an employer must qualify as an “eligible employer.” “Employer” here includes all members of a controlled group under IRC Section 52 (e.g., for a parent and subsidiaries, based on a greater than 50% ownership test) or Section 414(m) (affiliated service group) on an aggregated basis. The newer Act also added new ERC eligibility opportunities for 2021 Q3 and Q4 for “recovery startup businesses” and “severely financially distressed employers” – read more below – and extended the limitation period on ERC-related assessments from three years to five years from the date of filing the applicable Form 941. However, the ERC will be a credit against the Medicare tax for the third and fourth quarters, as opposed to its previously being a credit against the Social Security tax. The newer Act extended the availability of the ERC to the third and fourth quarters of 2021, each with its own $10,000-per-employee maximum amount of Qualified Wages/Qualified Health Plan expenses. Now, as of the March 11 passage of the American Rescue Plan Act, the ERC is available for all four quarters of 2021. Significantly, it made it so that an employer that did not take an ERC for 2020 because it or its controlled member received a PPP loan may now be eligible for ERCs for 2020. The December Consolidated Appropriations Act of 2021 provided for both retroactive applicability of the ERC for 2020 and extending and expanding the ERC for the first two quarters of 2021, and liberalized the ERC requirements for 2021. However, if the employer or any member of its controlled group received a Paycheck Protection Program (PPP) loan, the entire controlled group was ineligible for an ERC. įor 2020, certain employers whose operations were fully or partially suspended due to a COVID-19-related government order or whose gross receipts for any 2020 quarter were less than 50% of their gross receipts for the same quarter in 2019 were eligible for a fully refundable federal payroll tax credit called the Employee Retention Credit (ERC) for certain wages paid in 2020 Quarter 2 (for ERC purposes, March 13-31, 2020, is considered part of 2020 Q2), Q3, or Q4. In early August 2021, the IRS released additional ERC guidance on matters including whether the wages of a majority owner of a corporation and their family members can be ERC-eligible how various calculations apply to businesses not open in 2019 whether forgiven PPP loan amounts and other COVID-19 relief grant amounts should be included in the "significant decline in gross receipts" test and more. ![]() Text and decision trees last updated 5/3 to reflect new information regarding 2021 Q3/Q4 and to clarify questions regarding 20 eligibility. 15, 2021, has generally ended the fourth quarter availability of the ERC for most employers. Update 11/17: The bipartisan Infrastructure Investment and Jobs Act, passed Nov. Prepare for the Future of Your Business.Mitigate Enterprise Risk & Achieve Compliance. ![]()
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