Did you know that the Consolidated Appropriations Act, signed into law in December 2020, enhanced and expanded the Employee Retention Credit program originally created in the 2020 CARES Act? The comparison in the changes can get confusing quickly, so let’s just focus on what is now available with the new law, instead of comparing the nuances of each!
Now to get this credit your Company either 1) had a government shutdown of some sort or 2) suffered a significant reduction of gross receipts. If you had a government shutdown of some sort, the credit is only available to you when you were shutdown. To meet the gross receipts reduction, there must be a 50% decline in gross receipts in a 2020 quarter compared to the same quarter in 2019. For 2021, the threshold decreases to be a 20% decline in gross receipts compared to the same quarter in 2019.
A few other specifics the new law includes are as follows:
These new provisions can be lucrative for employers who suffered hardships and continued to pay employee wages and healthcare expenses. This credit is instant cash relief against the employer’s 6.2% share of Social Security employment tax! There are some additional technical nuances related to the credits so please contact your MST professional if you think you may qualify for this credit or would like further details.