Employee Retention Tax Credit

7(a) Loan Eligibility Exclusion

If an employer receives a Payment Protection Act 7(a) Loan, such employer shall not be eligible for the Employee Retention Credit and vice versa. Therefore, each business must review all options and make a decision that best fits its business needs.

Who is an Eligible Employer?

Partially or Fully Closed

Any employer carrying on trade in 2020, and the operation of the business is fully or partially suspended during the calendar quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to the coronavirus disease 2019 (COVID–19).

A Calendar Quarter Down More Than 50%

Who is an Eligible Employer?

For those with More than 100 Employees

Wages paid by an eligible employer to an eligible employee where the employee is not providing services due to the business being fully or partially suspended during the calendar quarter from orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID–19.

For those with 100 Employees or Less

Wages paid to any employee while the business was partially or fully shut down.

For employers of more than 100 employees, qualified wages paid or incurred by an eligible employer may not exceed the amount such employee would have been paid for working an equivalent duration during the 30 days immediately preceding such period.

Wages paid to an employee during a period when the gross receipts were down more than 50% through the Credit Termination Date.

Amounts paid or incurred by the eligible employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Internal Revenue Code of 1986), to the extent such is excluded from gross income of employees by section 106(a) of such Code.

Qualified wages paid or incurred by an eligible employer to an eligible employee or all calendar quarters shall not exceed $10,000.00.

What is the Credit Amount?

A quarterly credit against applicable employment taxes of 50 percent of the qualified wages with respect to each employee of such employer for such calendar quarter.

$10,000.00 maximum wage limit applied to each eligible employee for all relevant quarters.

See Limitations Below

What Limitations Apply?

The credit shall not exceed applicable employment taxes of all employees for such quarter, but excess credit shall be treated as an overpayment and refunded.

Wages and Compensation are specifically defined.

Employee shall not be counted where such employee is counting toward a Work Opportunity Credit.

Wages counted for this credit cannot be counted toward tax credits regarding paid family and medical leave under IRS Code. Sect. 45S.