After a series of rule changes and expansions to various COVID-19 relief programs, many companies are reconsidering certain federal benefits they had previously ruled out. The employee retention credit (ERC) is a prime example.
The initial intent of the ERC was to make it easier for a business to keep employees on the payroll if it was forced to close or partially suspend operations due to a mandatory government shutdown order or if it experienced significant revenue loss during the pandemic. While the basic structure and purpose of the program remain unchanged, both the eligibility criteria and the size of the potential benefits have changed significantly. (more…)
The Employee Retention Credit (ERC), was enacted in March 2020 as part of the CARES Act and has since been modified twice by Congress to provide greater benefits to employers. Currently, eligible employers may claim a credit equal to 70 percent of the “qualified wages” paid to employees, up to a maximum credit of $7,000 per employee per quarter. If the credit exceeds amounts owed for payroll taxes the excess is fully refundable so it can generate cash for your business. (more…)
President Biden signed the $1.9 trillion American Rescue Plan Act of 2021 (ARPA) into law on March 11, 2021. Unlike previous stimulus legislation, ARPA provides some economic relief to both businesses and individuals but the main purpose was to provide funding for government agencies and social programs. We have compiled a summary of the tax related provisions below. We will keep you updated as we continue to analyze the Act’s impact on our clients. (more…)
In March 2021, the IRS issued Notice 2021-20 containing a series of FAQs to provide guidance for employers claiming the Employee Retention Credit for calendar quarters in 2020. In the guide below, are references to the FAQs addressing specific areas of the 2020 ERC. The Notice addresses only 2020 ERC rules as the IRS plans to release additional guidance for 2021 ERC soon.
Click here to view the 2020 and 2021 Employee Retention Credit (ERC) Overview (more…)
A recently extended tax credit could make it easier for some businesses to expand their payrolls again after the COVID-19 pandemic. The Taxpayer Certainty and Disaster Tax Relief Act, part of the 2021 appropriations bill that was signed into law on December 27, 2020, includes a five-year extension of the Work Opportunity Tax Credit (WOTC).
The WOTC is designed to encourage businesses (and non-profit entities) to hire individuals from certain targeted groups that have traditionally faced employment barriers. After many companies were forced to reduce their workforces significantly in 2020, the number of people who could qualify for one of these groups has grown, especially those who qualify as recipients of long-term unemployment benefits. (more…)
The Employee Retention Credit was enacted in March 2020 as part of the CARES Act. It was enhanced and expanded when business relief legislation passed in December 2020 making it a more valuable option to generate cash flow. The amount of the credit was significantly increased, employers are now allowed to claim the credit until June 30, 2021, and the restriction that prevented employers with PPP loans from claiming this credit was repealed retroactively to March 2020. This repeal offers a significant opportunity for PPP loan borrowers to now benefit from this credit.
For employers eligible in 2020, the credit can be claimed on amended payroll tax returns and offset the employer portion of Social Security tax, but any excess credit is fully refundable. For 2021, employers can reduce their current federal payroll tax deposits and even request an advanced refund from the IRS. (more…)
The Consolidated Apportionment Act of 2021, signed by President Trump in late December, authorized $285 billion of funding for a new round of PPP loans. Loans are available to borrowers that previously received a PPP loan and to first-time borrowers. The SBA released application forms last week and opened their lender portal this week to a limited number of lenders to help underserved businesses get first access to PPP funds.
The SBA’s Portal will open Friday, January 15th for lenders with assets under $1 billion, and opens Tuesday, January 19th for all other lenders. Eligibility requirements have changed from the previous program. (more…)
The COVID-Related Tax Relief Act of 2020 signed by President Trump on Sunday, December 27, 2020, offers many opportunities for borrowers. More implementation guidance is expected from both the SBA and Treasury Department regarding unanswered questions and issues that will develop as the program is implemented but for now, borrowers should consider how they may benefit from these provisions. (more…)
Round 2 of the Small Business COVID-19 Relief Grant Program will begin accepting applications for one week only from February 2 at 8:00 am through February 8, 2021 at 6:00 pm
The California Small Business COVID-19 Relief Grant Program announced that it will take applications from California small businesses impacted by COVID-19 for grants of between $5,000 and $25,000. The application period begins at 6 a.m. on December 30, 2020, and continues until 11:59 p.m. on January 13, 2021. The program will award $500 million to eligible entities.
Eligible businesses are those with between $1,000 and $2.5 million in annual gross revenues based on their most recently filed tax return, and include sole proprietorships and nonprofits. (more…)