There is a big misunderstanding about the CARES Act Employee Retention Credit including who qualifies. FRLA and Synergi Partners are collaborating to make sure that members are aware that they may be able to access this important program designed to help retain employees.
Some of the key changes in the recently enacted stimulus package include:
- Companies that received PPP funding are NOW eligible to also apply for the Employee Retention Credit with some restrictions that prohibit double dipping. The legislation is retroactive meaning that companies receiving PPP will be eligible for to apply for ERC for wages paid from March 27 to December 31, 2020.
- The ERC program is extended by six months through June 30, 2021.
- Qualifying wages are increased from $10,000 annually to $10,000 per quarter.
- The employee-count threshold to be considered a small business is increased to 500 employees.
- New employers who were not in existence for all or part of 2019 are now eligible to claim the credit.
- The credit percentage increases from 50 percent to 70 percent. This means that the credit may be $7,000 per employee (70 percent x $10,000 wage base) for each of the first two quarters in 2021, or a total of $14,000 per employee.
- Employer health care expenses may be counted as qualifying wages when no other wages are paid (i.e. furloughed workers who continue receiving healthcare benefits).
Here are the six most common mistakes made by CFO’s and CPA’s regarding the CARES Act and Employee Retention Credit:
- We are an Essential Services Business and therefore Do Not Qualify
- We were Not Shut Down, stayed open the whole time and Do Not Qualify
- Our Company made over 50% sales year-over-year and therefore Do Not Qualify
- We are profitable this year and therefore Do Not Qualify
- We are a Non-Profit company, don’t pay taxes and Do Not Qualify
- We took the PPP Loan and therefore we Do Not Quality
If your company falls into any one of these categories, it’s possible that your company does qualify. Unlike the PPP loans, with the Employee Retention Tax Credit (ERC), there is no public disclosure because it is a federal tax credit. All information is highly protected from nondisclosure under the Internal Revenue Code.
Attend the webinar on Thursday for a live discussion with our friends over at Synergi Partners. They are the largest private disaster tax credit company in the United States. Partnering with DLA Piper, Synergi was instrumental in helping to draft the tax credit legislation. Synergi guarantees and defends their work against audit and through their history, have never had an audit overturned.
Let Synergi Partners help you understand all of these new nuances plus answer your questions.
CLICK HERE to view a full presentation from the webinar!