ERC Guidance Now Available

For employers claiming the employee retention credit (ERC) for 2020, the IRS recently issued guidance for those claiming the credit for 2020 calendar quarters. The newly released guidance provides clarification, as well as descriptive information, pertaining to the retroactive changes under the new law and the expanded eligibility for the ERC.

PPP Loan Recipients May Also Claim ERC

One very significant change within the Relief Act is eligible employers that received a Paycheck Protection Program (PPP) loan in 2020, may also be able to claim the employee retention credit. The caveat is that the same wages cannot be counted both for seeking forgiveness of the PPP loan and calculating the ERC. For more information on how employers in receipt of a PPP loan may claim the ERC for 2020, click here to read Notice 2021-20.

The ERC, established under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), was modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act). 

Qualifying for the Employee Retention Credit

According to the IRS, “employers who paid qualified wages after March 12, 2020, and before January 1, 2021, and who experienced a full or partial suspension of their operations or a significant decline in gross receipts. The credit is equal to 50 percent of qualified wages paid, including qualified health plan expenses, for up to $10,000 per employee in 2020. The maximum credit available for each employee is $5,000 in 2020”.

Additional Guidance Coming for 2021

The ERC was extended and modified by the Relief Act for the first two calendar quarters in 2021. The IRS plans to release guidance to address additional changes for 2021.

Questions?

As always, we are available to discuss the employee retention credit, paycheck protection plan forgiveness or any other topic that may be beneficial to you and your business. Please contact our office at any time.

For additional information on the Employee Retention Credit, click here.

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.