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 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. However, in November 2021, the Infrastructure Investment and Jobs Act ended the ERC early on September 30, 2021.

 The ERC is a refundable payroll tax credit for wages paid and health plan expenses, and it is available to employers 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;
  • An essential 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; or,
  • Experienced a significant decline in gross receipts during a calendar quarter compared to 2019, meaning either a 50% decline in 2020 versus 2019 or a 20% decline in 2021 versus 2019.

For 2020, the refundable tax credit is 50% of up to $10,000 in qualified wages paid by an eligible employer or a maximum credit of $5,000 per eligible employee.

For 2021, the refundable tax credit is 70% of up to $10,000 in qualified wages paid by an eligible employer per quarter or a maximum benefit of $21,000 per eligible employee.

The Employee Retention Tax Credit provides a compelling savings opportunity that companies can not afford to miss. Now is the time to explore the lucrative employee retention tax credit.

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