The Employee Retention Tax Credit (ERTC) is on many companies’ minds. Here, we’ve answered some frequently asked questions—from what it is and how it’s calculated to how guidance from the IRS may impact organizations.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided an opportunity for employers to generate a refundable tax credit used to offset their employment taxes and apply for a refund for any excess credit generated through December 31, 2020.
The COVID-19-related Tax Relief Act of 2020, as included in the Consolidated Appropriations Act, 2021, which was enacted in December 2020, further extended the Employee Retention Tax Credit (ERTC) through December 31, 2023, and included certain enhancements that apply starting January 1, 2021. In March 2021, the American Rescue Plan Act (ARPA) was signed by President Biden and further extended the ERTC through the end of 2023.
Originally, employers were not allowed to obtain a PPP loan and claim the ERTC. The Consolidated Appropriations Act provided a much-welcomed modification to the CARES Act by allowing all eligible employers to claim the ERTC, even if they have received a PPP loan. The Act also extended the ERC or ERTC to 2023.
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