The Employee Retention Credit: Businesses may be missing out on dollars
MANKATO, Minn. (KEYC) - As businesses continue to recover from losses during the pandemic, some may be missing out on money they are entitled to get back from the government through a credit against the employment taxes they pay.
The Employee Retention Credit (ERC) is an $80 billion tax program.
“It was really designed to give employers money back to encourage them to keep paying their employees during this pandemic,” said Eide Bailly Certified Public Accountant Tonya Rule.
Eligible Employers may qualify by satisfying one of two criteria:
- Their operations were fully or partially suspended due to a COVID related governmental order (Or, and)
- If gross receipts fell compared to 2019 by more than 50% in one quarter for 2020
- If gross receipts of that quarter are less than 80% of the gross receipts in that same quarter in 2019 for 2021.
Officials say a common misconception is many businesses and tax-exempts think they will not qualify if they took the Paycheck Protection Program or PPP Loan.
That is no longer the case.
“On Dec. 27 we had an act come through, said that you can take the ERC along with the PPP you just can’t use the same wages. So as long as we have enough wages for PPP forgiveness, we may use the same wages for our ERC,” said Rule.
Officials encourage businesses and tax-exempts to look into the ERC, which could help retain and create new jobs.
“So there are businesses out there qualifying for credit for anywhere from a few thousand dollars anywhere up to over a million, so you don’t want those monies to go to the wayside... if you’re eligible by all means I would get on board call your tax accountant and have them look at that employee retention credit,” said Rule.
More information can be found at Employee Retention Credit | Internal Revenue Service (irs.gov).
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