Are you eligible for the Employee Retention Credit? Here are your top questions answered
1. What is the Employee Retention program and what are the requirements?
The Employee Retention Tax Credit (ERTC) is an incentive created within the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) intended to encourage employers to keep employees on the payroll as they navigate the unprecedented effects of COVID-19. The CARES Act, signed into law on March 27, 2020, originally did not allow employers to both obtain a PPP loan and claim the ERTC.
The Consolidated Appropriations Act 2021 provides a modification to the CARES Act by now allowing all eligible employers to claim the ERTC, even if they have received a PPP loan. The Act also extended the ERTC to 2021.
An eligible employer is an employer that actively continues business during calendar year 2020 or 2021, including tax-exempt organizations, and meets either of the two following tests:
Government Order Test: If an employer experienced a calendar quarter in which the operations were fully or partially suspended during the calendar quarter due to order from the government authority limiting commerce, travel or group meetings due to COVID-19 then the business is eligible.
Reduced Gross Receipts Test: An employer is an eligible employer if it experiences a significant decline in gross receipts. For 2020, a decline of at least 50 percent in any calendar quarter in 2020 when compared to the same calendar quarter in 2019.
For 2021, a decline of at least 20 percent in any calendar quarter in 2021when compared to the same calendar quarter in 2019.
2. If I received a PPP or EIDL in 2020 and 2021 will I still be eligible?
3. What documents are required? How long is the process?
2020 Quarter 1, Quarter 2, Quarter 3 and Quarter 4 of IRS Form 941 2021 Quarter 1 (and 2, 3 and 4) IRS Form 941
Employers use IRS Form 941 to report income taxes, Social Security Tax, and/or Medicare taxes withholdings from employee paychecks.
PPP Forgiveness Applications for Rounds 1 and 2 if applicable
The process typically takes 2 - 3 months.
4. Is there an upcoming deadline?
December 31, 2024
For more information or to apply, contact Sanja Noble email: email@example.com