Are you leaving money on the table? A Reminder about the Employee Retention Credit

The Employee Retention Credit (ERC) was enacted in the early stages of the COVID-19 pandemic to help businesses impacted by shutdowns and closures to retain their employees. It is a refundable payroll tax credit against certain employment taxes on qualified wages. The ERC provides companies that experienced a decline in gross receipts compared to 2019, or experienced a full or partial suspension of operations due to government order, a credit of up to $5,000 per qualified employee for 2020, and up to $7,000 per qualified employee per quarter for the first three quarters of 2021. An essential business may still qualify for the ERC under certain circumstances, when more than a nominal portion of its operations are impacted by a government order.

The Consolidated Appropriation Act of 2021 (CAA) enabled this much-needed relief, but also created complexity for taxpayers that received a Paycheck Protection Program (PPP) loan while still qualifying for the ERC. These taxpayers should seek advice to get full forgiveness of the PPP loan in addition to maximizing the benefits available under the ERC, as the rules can get quite complicated. Taxpayers may qualify for the ERC retroactively even if they received a PPP loan in 2020 or 2021. ERC claims can be made up to 3 years from each quarterly payroll tax filing, so the time to claim the ERC will not run out until 2023 for most 2020 filings and 2024 for 2021 filings.

The ERC was originally scheduled to expire on December 31, 2021, but was terminated under the Infrastructure Investment and Jobs Act as of September 30, 2021. However, certain recently formed businesses with less than $1,000,000 of annual revenue (aggregation rules for certain related entities apply) may nevertheless qualify for limited benefits in the
4th quarter of 2021.

At Anchin, we have helped clients of all sizes receive Employee Retention Credits, with some clients obtaining up to $5 million. If you have any questions regarding your business’ eligibility or determining if you can still qualify for the ERC, please reach out to Richard Stieglitz, Paul Gevertzman, Joseph Molloy, Sue Lu or your Anchin Relationship Partner.