Revisions to the Employee Retention Tax Credit Program – May Be Worth a Second Look

Published in Government Relations on August 26, 2022

Craig Douglas

Several changes have occurred with the COVID-19 Employee Retention Credit (ERC) since its inception in 2020. If you or your tax advisor looked at this program when it was created in 2020 and decided that either you didn’t qualify for it or it wasn’t worth pursuing for some other reason, it may be worth taking another look because of the changes made to the program.

When the CARES Act was initially passed, it established the ERC which allowed eligible businesses to qualify for a tax credit if certain criteria were met. It was designed to help employers keep their staff employed, especially if their gross receipts declined by a certain percentage. At first, employers could qualify for a credit of up to $5000 per year for each of their employees based on wages paid between 3/12/2020 and 1/1/2021. They also had to show a 50% decline in gross receipts or have experienced a full or partial shutdown because of government limits on commerce. If they received a Paycheck Protection Program (PPP) loan, they couldn’t qualify for the ERC.

However, several changes have been made to the program since inception, and it is now easier to qualify for the ERC, and more tax credits are available now than in 2020. A few of the key changes to the program are as follows:

  • The ERC tax credit could be up to $21,000 ($7000 per quarter for the first 3 quarters of 2021) per employee per year instead of the $5,000 that was previously available.
  • Employers now only need to show that they experienced a shutdown or a 20% decline in gross receipts rather than the 50% decline that was required initially.
  • Employers who received a PPP loan are no longer automatically excluded.

It is also worth pointing out that just because you already filed your taxes for 2020 and 2021, and the program technically had an expiration date of 10/1/2021, that does not mean that you can no longer apply for the ERC. Employers have 3 years to determine eligibility, and can retroactively apply for the tax credit at any point during those 3 years. The IRS has created and released a table which helps explain the program, including eligibility requirements and what is available to employers during which date ranges. That chart, as well as other information and resources related to the program, can be found here.

Please consult with your tax advisor to determine the best course of action for your business as it relates to this ERC.


TAGS

  1. covid-19
  2. vgm
  3. vgm government

From Our Experts

The PHE Will End May 11 thumbnail The PHE Will End May 11 President Biden has announced that the COVID-19 Public Health Emergency (PHE) will officially end on May 11, 2023. Tom Powers Visit Washington D.C. thumbnail Tom Powers Visit Washington D.C. With the start of the 118th Congress and all members of Congress returning to D.C., VGM Government Relations' Tom Powers headed to Capitol Hill. OIG Recommends 'High/Low Reward' Strategy on Intermittent Catheters thumbnail OIG Recommends 'High/Low Reward' Strategy on Intermittent Catheters In this episode of Industry Matters, Alan Morris, Director of Research and Strategy for VGM Government Relations, and John Gallagher, VP of VGM Government Relations, talk with Brian Leitten from Leitten Consulting, about a new study, "OIG Recommends 'High Risk/Low Reward' Strategy on Intermittent Catheters." The study looks at concerns and costs associated with reducing access to urinary catheters. Additional HCPCS Codes Added to F2F/WOPD Required List thumbnail Additional HCPCS Codes Added to F2F/WOPD Required List On Jan. 14, 2023, CMS released a public notice CMS-6088-N, adding 10 more HCPCS codes to the F2F/WOPD Required List. Ronda Vlog: Recent Updates to the New Oxygen Policy thumbnail Ronda Vlog: Recent Updates to the New Oxygen Policy Listen below as Ronda Buhrmester, Sr. Director of Payer Relations and Reimbursement gives the latest update on the new oxygen policy. Republicans Announce New Members on Key Committees thumbnail Republicans Announce New Members on Key Committees On Wednesday, Jan. 11, 2023, the United States House Republican Select Committee met to announce the new Republican members appointed to various committees in the House. For the DME industry, there are three key committees of justification to work with. PHE Renewed for Another 90 Days Pushing it to April 2023 thumbnail PHE Renewed for Another 90 Days Pushing it to April 2023 On Wednesday, Jan. 11, 2023, HHS Secretary Xavier Becerra announced an extension of the COVID-19 Public Health Emergency (PHE). This extension will take us to April 2023. Be sure to read how this will effect the industry. President Biden Signs Omnibus Bill Two Days Before The New Year thumbnail President Biden Signs Omnibus Bill Two Days Before The New Year Yesterday, Dec. 29, 2023, President Biden signed the end-of-year omnibus bill. Within this bill, there is a language for the DMEPOS industry.