Employee Retention Credit Available for Business

The Treasury Department and the Internal Revenue Service launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable credit is 50% of up to $10,000 in wages paid by an employer whose business has been financially impacted by COVID-19.

The credit is available to all employers regardless of size, including tax exempt organizations. There are only two exceptions: state and local governments and their instrumentalities and small business that take small business loans.

Qualifying employers must fall into one of two categories:

1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
2. The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify at the end of that quarter.

These measures are calculated each calendar quarter.

The amount of credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March, 12, 2020 and before Jan. 1, 2021 are eligible for the credit.