The American Rescue Plan Act of 2021 (ARPA) was passed in March which modified and extended the Employee Retention Credit (ERC) from June 30, 2021 until December 31, 2021. The Internal Revenue Service urges employers to take advantage of the ERC which is designed to make it easier for businesses that, despite challenges posed by COVID-19, chose to keep their employees on payroll.
Additionally, employers who received a Paycheck Protection Program (PPP) loan and were previously excluded from claiming the ERC can now potentially claim the credit. However, as part of the credit calculation, the same wages cannot be used for obtaining forgiveness of the PPP loan and in calculating the ERC.
Qualifications
In order to qualify for the ERC, employers that carry on a trade or business that must meet either of the following criteria for the indicated year.
Credit
Qualifying Wages*
*The employee thresholds are based on the average number of a business’s full-time employees employed during 2019. There are special rules for certain types of employers as well as employers who were either not in existence in 2019 or only existed for some calendar quarters during 2019 or after.
Please note, there are some employers who are not eligible for the ERC as well as exceptions related to the ERC that have not been addressed above. If you have any questions relating to the ERC, extension, and/or modifications, please let us know. We would be happy to assist you in analyzing how the ERC may benefit your business!
For current BKC business clients, if we believe you may be eligible for the ERC, you should expect to hear from us within the month of June 2021 to discuss the possibility of qualifying for the ERC and the steps required to begin the process. For payroll tax periods that have already been filed it is possible to receive the credit as a refund of cash already paid.