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American Rescue Plan Enhancements to Employee Retention Credit

The American Rescue Plan Act of 2021 (?Ç£ARPA?Ç¥) extended the employee retention credit through the end of 2021 and enhanced the scope of employers eligible to claim the credit by adding two new employer categories: (i) ?Ç£recovery startup businesses?Ç¥ and (ii) ?Ç£severely financially distressed employers?Ç¥.?á A ?Ç£recovery startup business?Ç¥ is a business that was created after February 15, 2020 and has annual gross receipts of no more than $1,000,000. Recovery startup businesses may claim the employee retention credit (capped at $50,000 per quarter) even if they do not otherwise qualify for the credit (i.e., they neither experienced a complete or partial shutdown due to a COVID-19 governmental shutdown order nor had a decrease in gross receipts of at least 20% for the applicable quarter). A ?Ç£severely financially distressed employer?Ç¥ is an employer who had a decrease in gross receipts of at least 90% for the applicable quarter, and such employers… Continue Reading

IRS Issues New FAQs on Claiming the Employee Retention Credit

The IRS recently issued Notice 2021-20, which contains 71 new FAQs related to the employee retention credit (the ?Ç£ERT?Ç¥) available on qualified wages paid between March 13, 2020 and December 31, 2020. The new FAQs do not address changes to the ERT enacted as part of the Consolidated Appropriations Act, 2021 on qualified wages paid between January 1, 2021 and June 30, 2021, which the IRS says will be addressed in future guidance. The FAQs provide numerous, helpful examples of how to apply key definitions and other provisions applicable to the ERT, such as who is an eligible employer; what constitutes a full or partial suspension of a trade or business, a significant decline in gross receipts, qualified wages, and allocable qualified health plan expenses; and the interaction of the ERT and Paycheck Protection Program loan recipients, among other topics. For additional information on the ERT, please see our prior… Continue Reading

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