CARES Act Provides Employee Retention Credit for Impacted Businesses

SBA Disaster Loan Application Assistance-1

Last night, the Senate passed an updated version of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The bill builds upon earlier versions of the CARES Act and includes an employee retention credit for employers that close or partially close due to the coronavirus pandemic. Eligible employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.

What employers are eligible?

  • Any employers who were carrying on a trade or business during 2020, and had full or partially suspended operations of that business during the quarter due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to the COVID-19 outbreak.
  • Employers that remained open BUT that have gross receipts that are less than 50% of their gross receipts for the same quarter last year are also eligible, until their gross receipts exceed 80% of their gross receipts for the same calendar quarter last year.

What wages are qualified wages?

  • For employers with more than 100 employees employed during 2019, qualified wages for the credit are wages that the employer pays employees who are not providing services due to the suspension of the business or a drop in gross receipts.
  • For employers with 100 or fewer employees employed during 2019, all wages paid qualify for the credit.
  • Any wages used in determining the new payroll tax credits for family leave or sick leave as part of the Families First Coronavirus Response Act may not be used in determining qualified wages for the employee retention credit.
  • For eligible employers, wages paid after March 12, 2020, and before January 1, 2021.

What else is unique about this credit?

  • The credit applies to for-profit companies and non-profit organizations.
  • The credit may be refundable under certain circumstances.
  • The credit will not be available for employers taking out a payroll protection loan under Section 7(a) of the Small Business Act.
  • The credit is not available for the U.S. government or any state or local government entities.
  • Employees qualifying and taking advantage of WOTC are not eligible for this credit.

HOW TO GET STARTED:

  • Visit B&M's CARES Act Assistance web-page and complete the form.
  • A Brixey & Meyer team member will be in contact with you within 24 hours to discuss your eligibility for the new retention credit. 

We are are ready and able to assist you during this unprecedented time. If we can be of further assistance to you or your business, contact us here.

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