ELIGIBLE COMPANIES CAN TAKE ADVANTAGE OF BOTH THE PAYCHECK PROTECTION PROGRAM (PPP) AND THE EMPLOYEE RETENTION TAX CREDIT (ERTC) PROGRAM

When the ERTC was originally passed, it was overshadowed by the Paycheck Protection Program (PPP), and companies had to select either PPP or ERTC, and most companies selected PPP because it was more generous.

However, revisions to ERTC in December, means that eligibility for the credit has broadened AND eligible companies can take advantage of both the PPP and ERTC. 

ERTC also is much more generous for 2021 use. IRS guidance explains:

  • Effective January 1, 2021, employers are eligible if they operate a trade or business during January 1, 2021, through June 30, 2021, and experience either:
  • A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or
  • A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% of the gross receipts in the same calendar quarter in 2019 (to be eligible based on a decline in gross receipts in 2020 the gross receipts were required to be less than 50%).

You can learn more about the credit at: https://www.irs.gov/newsroom/new-law-extends-covid-tax-credit-for-employers-who-keep-workers-on-payroll

New law extends COVID tax credit for employers who keep workers on payroll - Internal Revenue Service

IR-2021-21, January 26, 2021 WASHINGTON — The Internal Revenue Service urges employers to take advantage of the newly-extended employee retention credit, designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll.

www.irs.gov

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