If so, you may be eligible for the Employee Retention Credit.
Author: Trent Westmoreland, CPA
Since March 2020, many businesses have been dealing with supply chain disruptions. The COVID-19 pandemic stalled the usual business activity and distribution of goods and supplies for business across the United States and the world. These disruptions oftentimes are from government orders that have either forced businesses to suspend operations or affected suppliers and their ability to fulfill necessary orders. Many of these supply disruptions are just now severely impacting businesses. Per IRS Notice 2021-20, an employer may be considered to have a full or partial suspension of operations due to a governmental order if, under the facts and circumstances, the business’s suppliers are unable to make deliveries of critical goods or materials due to a governmental order that causes the supplier to suspend its operations. This supply chain disruption under the facts and circumstances would qualify the employer for the Employee Retention Credit (ERC).
Employee Retention Credit Background
The ERC is a refundable tax credit claimed against certain employment taxes. The ERC was created as part of the CARES Act and expanded in subsequent legislation to encourage business to retain their employees.
How To Qualify
Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business and experience either:
- the full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or
- a significant decline in quarterly gross receipts as measured against the same quarter in 2019
- 50% decline for 2020
- 20% decline for 2021
Maximum Credit Amount
- For 2020, the maximum credit is 50% of qualified wages up to $10,000 per year, which is up to a $5,000 credit per employee for 2020.
- For 2021, the maximum credit is 70% of qualified wages up to $10,000 per quarter, which is up to a $7,000 credit per employee per quarter.
- If you qualify for the ERC for all of 2020 and 2021, the maximum credit would be $33,000 per employee.
Our Experience with ERC
As of August 10, 2021, Henry & Peters, P.C. has helped our clients claim over $10 million in Employee Retention Credits.
We have a dedicated team that is helping our clients with the ERC and they are keeping up with the requirements and guidance necessary to calculate and claim the credit.
Contact us at our offices in Tyler, Longview, or Frisco. We would be pleased to visit with you and determine if your business qualifies for the Employee Retention Credit and how we can help you get the credit.