New Law Makes It Easier for Employers to Claim Employee Retention Credit

In addition to additional PPP funding and other COVID-related legislation, the Consolidated Appropriations Act, 2021 made a number of changes to the Employee Retention Credit (ERC), originally created in the CARES Act. According to the Internal Revenue Service, the changes are “designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll.”

Some of the notable changes that may impact some employers include the following:

• Extension of ERC to June 30, 2021
• ERC equal to 70% of qualified wages paid after December 31, 2020 through June 30, 2021
• Qualified wages limited to $10,000 per employee per calendar quarter in 2021
• Impact of PPP Funding on ERC
• Changes to definition of “qualified wages”

To determine eligibility or impact of ERC, you should discuss the new law with your accountant.