Employee Retention Tax Credit Consulting

What is the employee retention tax credit?

The employee retention credit (ERC) was first introduced by the CARES Act in 2020. The Consolidations Appropriations Act (CAA) of 2021 and the American Rescue Plan Act (ARPA) of 2021 have expanded the eligibility, benefits, and duration of the ERC through the fourth quarter of 2021 to employers of all varieties, including tax-exempt organizations and privately held entities.  

 The ERC is a payroll tax credit for wages paid and health plan expenses, and it is available to taxpayers who meet one of the following three criteria: 

  • Operations were fully or partially suspended during any calendar quarter in 2020 or 2021 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19 
  • Experienced a significant decline in gross receipts during the calendar quarter of 2020 (50%) or 2021 (20%) compared to that respective of 2019 
  • The business’s suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations 

All employers should review their financial information and operational situation to see if they meet one of the forementioned criteria for 2020 and/or 2021. Refunds are available for up to $5,000 per eligible employee for 2020, and $7,000 per eligible employee per quarter of 2021 (up to $28,000 for 2021). 

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