Paycheck Protection Program ("PPP") & Employee Retention Credit ("ERC")
Suffice it to say there are outstanding government benefits available to companies who qualify for PPP Loans and Employee Retention Credits. Initially, these two programs were mutually exclusive and a company could only seek relief under one of the programs. Subsequently, the use of both programs by the same company was permitted under the new rules (based, in part, upon companies not being able to seek relief under both programs for the exact same employee wages).
Unfortunately, the rules and regulations surrounding these two programs are complex and confusing as the programs were initially established and subsequently revised through multiple legislations and related rules and regulations.
CALL US FOR A FREE CONSULTATION AND ASSESSMENT OF YOUR ELIGIBILITY
CALL US TO MAXIMIZE YOUR BENEFITS UNDER BOTH THE PPP & ERC PROGRAMS
CALL US TO ENSURE YOUR APPLICCATION OF THE LEGISLATIVE RULES AND YOUR DOCUMENTATION WILL BE “AUDIT READY”
Paycheck Protection Program
The PPP loan Program was initiated under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act). The PPP Loan Program was designed to provide a direct incentive for small businesses to keep their workers on payroll. Key aspects of the PPP Loan Program are identified below.
Employee Retention Credit
The Employee Retention Credit (“ERC”) is controlled by the following legislation:
Cares Act § 2301
Consolidated Appropriations Act 2021
American Rescue Plan Act Of 2021
Note that in certain, but not all, cases the newer legislation superseded prior legislation.
The ERC is a refundable tax credit against certain employment taxes equal to 50% or 70% (depending on time period) of the qualified wages an eligible employer pays to employees after March 12, 2020, and through December 31, 2021. Negatively impacted businesses may be able to receive up to $33,000 per employee.
Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer's employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS. Because this credit can apply to wages already paid after March 12, 2020, many struggling employers can get access to this credit by reducing upcoming payroll tax deposits or requesting an advance credit. Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and 2021 and experience either:
A significant decline in gross receipts; or
The full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19.
Additionally, companies which opened after February 15, 2021 may be eligible for assistance under the ERC Program.