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Employee Retention Credit Alert!

Mar 25, 2021
2 min read

As you may know, there have been three major stimulus bills, included and subsequently enhanced in these bills, is the Employee Retention Credit.

The Employee Retention Credit is now capped at 5K per employee for 2020, & 7K per employee per quarter for 2021. The total potential benefit is 33K per employee.

There are two factors that can create eligibility, a drop in revenue compared to 2019 or a complete or partial suspension of operation.

For 2020 the drop needs to be more than 50% for one quarter, and for 2021, the drop needs to be at least 20% for the current or prior quarter.

Some businesses do not have a drop nor a full suspension of operation and may think they are not eligible. But the definition of partial suspension of operations is very broad, see the IRS notice below. One example (page 36) the notice provides, is a hospital that needs to cancel elective surgeries is considered to have a partial suspension of operations. This is regardless of the hospital’s actual workload or revenue.

If you believe you may be eligible for the ERTC, you may want to evaluate this before you file the 1st quarter payroll forms, while you can always amend the return within 3 years, it is usually smoother to file correctly the first time. Also, if you received PPP this quarter, you would want to properly allocate the payroll, because you can’t claim the same payroll for PPP and ERTC.

If you conclude that you are eligible and there is no conflict with the PPP, then you can notify your payroll service provider to claim the credit, if this still needs to be analyzed, then we would recommend telling the payroll company to wait on filing the forms until later in the month.

 
 
 

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The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities.

 

Archer Investment Corporation is an investment adviser registered under the Investment Advisors Act of 1940. Registration as an investment adviser does not imply any level of skill or training. For more information please visit adviserinfo.sec.gov and search for our firm name

www.archerinvestment.com

Archer Investment Corporation is an investment adviser registered under the Investment Advisors Act of 1940.  Registration as an investment adviser does not imply any level of skill or training. For more information, please visit adviserinfo.sec.gov and search for our firm name.

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