It is not yet eligible for the ERC due to a suspension of its operations or a decrease in gross revenues. The assumption that any negative financial impact is required to benefit from the ERC is wrong. Many employers may be eligible for the ERC even though they haven't met the gross income test. While the CARES Act seems to make it clear that no decrease in income is required by establishing that an employer can be considered eligible if it complies with the government's orders test or the gross income test, employers often overlook this fact.
The initial confusion surrounding eligibility for the employee retention credit in the CARES Act was compounded by subsequent legislative changes. The employee retention credit is a fully refundable tax credit that eligible employers request to cover certain payroll taxes. Skilled nursing facilities have tended to avoid the employee retention credit because of their complexity, even though they are likely to meet the eligibility requirements. ERC credits are calculated based on the qualifying wages paid to employees during their status as an eligible employer.
The initial confusion surrounding eligibility for the employee retention credit was further compounded by legislative changes following the CARES Act, which resulted in an eligibility matrix that employers could navigate with little guidance. The employee retention credit is available to churches and other religious organizations that were affected by capacity restrictions imposed by the government for meetings or that experienced a significant decrease in their gross revenues. Because of the complexities of eligibility for the employee retention credit, Thomson Reuters has updated the employee retention credit tool to help all employers determine if they qualify for the credit.