The February AEDC Voice Webinar featured Sarah Blair and Laura Morris of BDO.
The Employee Retention Credit (“ERC”) was significantly expanded and extended as a part of the Consolidated Appropriations Act, 2021 (“Act”). The ERC is a refundable payroll tax credit for wages paid and health coverage provided by an employer whose operations were either fully or partially suspended due to a COVID-19-related governmental order or that experienced a significant reduction in gross receipts. Notably, the Act made a retroactive change to the ERC, applicable from March 13, 2020, that may allow employers that received PPP loans may qualify for the ERC with respect to wages that are not paid with proceeds from a forgiven PPP loan. In addition to the retroactive change, the following changes to the ERC apply prospectively from January 1 to June 30, 2021:
-The ERC rate is increased from 50% to 70% of qualified wages and the limit on per-employee wages is increased from $10,000 for the year to $10,000 per quarter
-The gross receipts eligibility threshold for employers is reduced from a 50% decline to a 20% decline in gross receipts for the same calendar quarter in 2019.
-The credit is available to certain government instrumentalities, including colleges, universities, organizations providing medical or hospital care, and certain organizations chartered by Congress.
-The 100-full time employee threshold for determining “qualified wages” based on all wages paid to employees is increased to 500 or fewer full-time employees.
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