ERC Update for Employers ~ Symphony Employer Solutions Keeps YOUR Business Compliant

ERC Update for Employers: Understanding Available Credits under Each Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized a credit called the Employee Retention Credit (ERC) to support employers hurt by the COVID-19 pandemic. Since being created by the CARES Act the ERC retroactively improved by the Consolidated Appropriations Act of 2021 (CAA) and the expanded and extended again by the American Rescue Plan Act (ARPA). Many employers are confused by the multiple retro-active changes, expansions, and updates to the law. The credits can be applied retroactively if employers discover that they were eligible in the past and did not take advantage of the ERC program. The following is a summary of the basics that will apply to most employers.
CARES Act CAA ARPA
Time Period for Credit Qualified Wages paid after Mar 12, 2020 thru Dec 31, 2020 Extends period to cover qualified wages paid from Jan 1, 2021 thru Jun 30, 2021 Extends period to cover qualified wages paid from Jul 1, 2021 thru Dec 31, 2021
Eligibility Requirements 1. Businesses with operations that were either fully or partially suspended by a COVID-19 governmental order and only during the period the order is in force; or 2. Gross receipts were less than 50% of gross receipts for the same quarter in 2019 until quarter as gross receipts are 80% of the same quarter in 2019. Aggregation rules apply for common control, Affiliated Service Orgs, and control groups to determine the decline in gross receipts. 1.  Same, No Change 2. Gross receipts are less than 80% of gross receipts for the same quarter in 2019. Aggregation rules continue to apply. 1.  Same, No Change 2. Same, No Change
Available Credit Credit is 50% of the qualified wages paid to an employee, plus the cost of providing health benefits to the employee. Beginning January 1, 2021, credit is 70% of qualified wages, plus the cost of providing health benefits to the employee. Same, No Change
Wage Cap and Eligible Credit 1. Per Employee wage cap of $10,000 in annual qualified wages 2. Credit Eligible wages is x 50%. 3. Maximum Annual credit cap of $5,000 per employee. 1. Wage cap is modified from $10,000 annual cap to $10,000 quarterly cap. 2. Credit Eligible wages increase from 50% to 70%. Beginning January 1, 2021, Quarterly credit cap is increased to $7,000 per employee for each of the first two quarters of 2021 ($10,000 in qualified wages x 70%) 3. Maximum possible credit $14,000 per employee. 4. Qualified wages cannot be counted twice. Example: can’t use to receive forgiveness of 1st or 2nd PPP loan and ERC credit. 1. Same, No Change 2. No Change to caps but expanded to include qualified wages in 3rd and 4th quarters of 2021. 3. Maximum possible credit $28,000 per employee. 4. Same, No Change
Inter Play with PPP Loan A company that receives a Paycheck Protection Program (PPP) loan is ineligible to claim the Employee Retention Credit (ERC). A company that received or receives a PPP loan is now eligible to use wages in excess of wages used for PPP loan forgiveness for ERC. Qualified wages cannot be counted twice. This modification is retroactive to include qualified wages paid after Mar 12, 2020. Same, No Change
Advance Payment of Credit No Advance Payment Employers can file Form 7200 for advance credits Same, No Change.
Impact of Employer Size Employers with 100 or fewer employees is eligible for the credit, even if the employee was working. A company with more than 100 employees cannot take the credit for wages paid to an employee performing services for the employer (either teleworking or working at the workplace, even though at reduced capacity due to reduction in business). Beginning January 1, 2021, the limit increases from 100 to 500. An employer with 500 or fewer employees will be eligible for the credit, even if employees are working. When calculating the 500-employee threshold, the employees of all aggregated companies are counted toward the threshold. Same, No Change.

This summary does not include all provisions of the CARES Act, CCA, and APRA. There are considerations that address non-profit organizations, Government employers, new employers, and other special circumstances. If you have any questions, please contact us at 866.652.8007.

We Remember to Never Forget

We Remember to Never Forget

This Memorial Day We pay tribute to the courage of the many brave women and men who have fought and served in the United States Armed Forces. We honor their love for this country, and we remember their sacrifice. Never forget. So our employees can be with their...

read more
Generous Support For SMBs

Generous Support For SMBs

ERC Is the Largest, Most Generous Support for SMBs Since PPP For businesses that have seen a drop in receipts of over 20%, the ERC offers substantial, generous support for SMBS that are dealing with the fallout from COVID-19. Business owners should carefully...

read more
100% Cobra Subsidy Model Notices Available

100% Cobra Subsidy Model Notices Available

The U.S. Department of Labor (DOL) has released to its website guidance and model notices to help employers comply with the federal COBRA premium subsidy put in place by the American Rescue Plan Act (ARPA). To review the benefits and requirements of the Cobra Subsidy,...

read more
Paid Time Off for Vaccinations (with EMPLOYER TAX CREDITS)

Paid Time Off for Vaccinations (with EMPLOYER TAX CREDITS)

White House Urges Employers to Provide Paid Time Off for Vaccinations Eligible Employers. An eligible employer is any business, including a tax-exempt organization, with fewer than 500 employees. An eligible employer also includes a governmental employer, other than...

read more
100% Subsidized COBRA Adds Complexity for Employers

100% Subsidized COBRA Adds Complexity for Employers

The American Rescue Plan Act of 2021 (“ARPA”), which became law on March 11, 2021, provides government-subsidized free COBRA coverage for a six-month period from April through September 2021 for employees (and their family members) who experience a loss of group...

read more
Guide for Navigating Vaccines and the Workplace

Guide for Navigating Vaccines and the Workplace

COVID-19 vaccines have demonstrated effectiveness in preventing recipients from getting sick. Health experts and scientists are still investigating how vaccines will affect the spread of COVID-19. The world community is hopeful that they will also reduce or eliminate...

read more
Second Draw PPP Calculation Period and Documentation

Second Draw PPP Calculation Period and Documentation

How Do I Calculate the Maximum Loan Amount that My Company Is Eligible for and How Do I Need to Document the Calculation? For organizations that are eligible to apply for a Second Draw PPP loan, the Economic Aid Act, Section 307 of this interim final rule (IFR),...

read more