The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021 and extended the Employee Retention Tax Credit (ERTC) through December 2021. Employers may qualify if their business is under a government order for full or partial suspension of operations or if gross receipts for a calendar quarter declined at least 20%, generally compared to the same calendar quarter in 2019.) In addition, it included a provision for recovery start up businesses that could not previously qualify (see below for more details.)
The credit remains as 70% of up to $10,000 in qualified wages per employee per quarter for 2021. Read more about the background of the Employee Retention Tax Credit here.
Now that most governmental orders have been lifted, many businesses will no longer qualify based on the full or partial suspensions of their business. Businesses may still qualify by utilizing the gross receipts test or other metrics allowed by the legislation.
New starting July 1, 2021! The ERTC was extended to ‘recovery start up businesses’ for the first time beginning July 1, 2021. New businesses may qualify if they were started after February 15, 2020, with average annual receipts of under $1,000,000. The tax credit for recovery start up businesses will continue to be 70% of qualified wages up to $10,000 per employee; however, the credit cannot exceed $50,000 per quarter.
If you have questions as to whether your business qualifies for the ERTC, please consult your accountant or tax professional. As always, PaySteady is here to help our clients process these tax credits. Call or email us anytime!