This is achieved with loans that are 100% guaranteed by the federal government to companies that keep their employees on the payroll during the COVID-19 pandemic. The loan is fully forgivable as long as the company uses the funds for payroll expenses, commercial mortgage payments, rent, or utilities. These FAQs are not included in the Internal Revenue Bulletin and therefore cannot be relied upon as a legal authority. This means that the information cannot be used to support a legal argument in a court case.
An employer may not receive the employee retention credit if it receives a PPP loan authorized under the CARES Act. An eligible employer who receives a PPP loan, regardless of the date of the loan, cannot apply for the employee retention credit. An employer that is considered a single employer under the aggregation rules cannot receive the employee retention credit if any member of the employer's aggregate group receives a PPP loan. For more information on aggregation rules, see Determining which entities are considered a single employer under aggregation rules.
An employer receiving a PPP loan may not receive an employee retention credit, regardless of if and when the loan is forgiven. For more information on eligible employers, see Determining Which Employers Are Eligible to Apply for the Employee Retention Credit. An acquiring employer that purchases the assets of a target employer that has received a PPP loan will not be considered to have received a PPP loan by virtue of the acquisition of assets, provided that the acquiring employer does not assume the obligations of the target employer under the PPP loan. In this case, the acquiring employer may apply for the employee retention credit after the closing date of the transaction if the employer meets the requirements to apply for the credit.
In addition, any employee retention credit requested by the acquiring employer for qualified wages paid before the closing date will not be subject to recovery under section 2301 (l) () (of the CARES Act). If, as part of the acquisition of the assets and liabilities of the target employer, the acquiring employer assumes the obligations of the target employer under the PPP loan, after the closing date of the transaction, the acquiring employer will generally not be considered to have received a PPP loan, provided that the acquiring employer has not received a PPP loan before, on, or after the closing date; however, salaries that can be considered qualifying wages after the closing date will be limited. Specifically, wages paid by the acquiring employer after the closing date to any person who was employed by the target employer on the closing date will not be considered qualifying wages. Subject to this limitation, the acquiring employer may request the employee retention credit for qualified wages paid on and after the closing date, provided that the employer meets the requirements to apply for the employee retention credit.
Yes, but not for the same wage payments. Any qualifying salary for which an eligible employer applies for the employee retention credit will not be considered for the purpose of determining a section 45S credit. Therefore, an employer cannot request a credit under section 45S with respect to the qualified wages for which it is requesting the employee retention credit, but may request a credit under section 45S with respect to any additional wages paid, provided that the requirements of section 45S with respect to additional wages are met. An eligible employer cannot apply for the employee retention credit and the WOTC for the same employee for the same period of time.
Those who have more than 100 full-time employees can only use the qualified salaries of employees who do not provide services due to the suspension or decline of business activity. The ERTC is a refundable credit that companies can request on qualifying salaries, including certain health insurance costs, paid to employees. Companies can no longer pay their salaries to apply for the employee retention tax credit, but they have until 2024 and, in some cases, 2025, to analyze their payroll during the pandemic and apply for the credit retroactively by filing an amended tax return. The notice includes guidance on how employers who received a PPP loan can retroactively apply for the employee retention tax credit.
This law increased the employee limit to 500 to determine what salaries are applicable to the credit. Employers with 100 or fewer full-time employees can use all the salaries of employees who work, as well as any paid time that they are not working, with the exception of paid vacation provided under the Families First Coronavirus Response Act. Also, remember that if a customer has applied for a PPP loan and will be forgiven for it, they may now be eligible for the retention credit for employees with certain salaries. The following rules apply to determine if an employer (acquiring employer) that purchases the assets and liabilities of an entity (target employer) is eligible for the employee retention credit.
While the Employee Retention Tax Credit (ERTC) program has officially expired, this does not affect a company's ability to apply for the ERTC retroactively. The IRS has barriers to prevent wage increases from being factored into the credit once the employer is eligible for the employee retention tax credit. . .
