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Menden Freiman MendenFreiman LLP

The Expanded Employee Retention Credit: What Employers Should Know

The Consolidated Appropriations Act of 2021 modified the Employee Retention Credit (ERC) in order to extend its availability, increase its value, and expand eligibility requirements. Many key changes apply retroactively to 2020. The most significant and beneficial modifications include the following:

  • Retroactively making PPP loan recipients eligible for the credit in 2020 and 2021
  • Increasing the maximum credit to $7,000 per employee per quarter in 2021
  • Extending the credit through June 30, 2021; note that the American Rescue Plan Act of 2021 subsequently extended this timeframe to December 31, 2021, resulting in a potential credit value of up to $28,000 per employee in 2021
  • Lowering the economic qualification threshold so the ERC is available to more employers in 2021
  • Increasing the number of full-time employees from 100 to 500 for eligibility as a small employer in 2021
  • Expanding the list of eligible businesses in 2021 to include colleges, universities, hospitals, and medical care providers

Our experienced attorneys can guide you through the credit process and perform the following tasks, among others:

  • Review entity ownership and structure to determine if the controlled-group rules apply
  • Determine if eligibility is available under the government-mandate test or the significant-decline-in-gross-receipts test
  • Analyze and document the eligible periods for businesses qualifying under the government-mandate test
  • Analyze and document the eligible periods for businesses qualifying under the significant-decline-in-gross-receipts test
  • Review employment records to determine eligibility as a small or large employer
  • Coordinate with accounting and payroll companies in calculating and claiming the ERC
  • Review PPP loans and forgiveness applications to maximize your benefits under the ERC and the PPP

We invite you to contact us if you want to learn more about this credit, determine if you are eligible, and calculate your potential credit.

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