NEW
3/3- ERTC Guidance from the National Restaurant Association (click here)

IMPORTANT TAX CREDIT OPPORTUNITY

There is another potential government program to assist small businesses (including restaurants) that was expanded with the Consolidated Appropriations 2021 Act signed December 27, 2020. 

 

As part of the CARES Act in March 2020, in addition to the PPP loan forgiveness program, the government also provided an Employee Retention Credit program.  But under the CARES Act if you received a PPP loan you were not eligible to take advantage of the Employee Retention Credit.  

 

The Consolidated Appropriations 2021 Act added Sections 206 and 207 which stated that they were updating this provision and now an employer could take advantage of both programs.

 

In order to qualify for the Employee Retention Credit, the Company had to have a decline in “gross receipts” of at least 50% in a calendar quarter or had to be shut down due to state or federal mandates (qualified wages only during the shut down period- unless meet the other criteria as well).  If that parameter is met, then the wages in that quarter and until the end of a future quarter where the “gross receipts” for 2020 were more than 80% of 2019’s amount.

 

There are different rules if the Company has more than 100 employees (credit only available if you paid individuals while they were not working); or if fewer than 100 employees (covers all wages).

 

You cannot use wages that were utilized for PPP Loan forgiveness as part of the Employee Retention Credit.

 

The Employee Retention Credit is equal to 50% of an employee’s qualified wages (including health care costs), but limited to a maximum of $5,000 per employee.

 

The Credit was originally through December 31, 2020.  They have now expanded it through June 30, 2021.   More beneficial in 2021 as credit is available per quarter rather for the year.

 

https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-general-information-faqs


Paycheck Protection Program, Round Two