The Covid-19 pandemic was tough on organizations of all sizes. As the pandemic began, many businesses found their revenues suddenly dropping without much of an idea of how long, or how bad, the pandemic may be. Fortunately for businesses partnered with Payroll Service Solutions, they were able to have a helping hand navigate their business through this turbulent time period. One way which Payroll Service Solutions was able to assist businesses during the Covid-19 pandemic was the ERC tax credit. The ERC tax credit was created with the The Infrastructure Investment and Jobs Act, enacted on November 15, 2021. This new and sudden change Payroll Service Solutions was able to navigate with ease to ensure clients received their maximum benefit. There are a number of eligibility requirements which must be met in order to be able to take advantage of the ERC tax credit and can vary by organization type.
Please note: Like other payroll companies in Philadelphia, Payroll Service Solutions is not able to determine your eligibility for ERC.
The best way to determine your organization’s eligibility for the ERC is to speak with your accountant who will be able to determine if you meet the credit’s requirements. If your business is eligible for the ERC then you would be able to take advantage of a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Additionally, The Infrastructure Investment and Jobs Act was amended to limit the credit to wages only paid through October 1, 2021 unless the employer is a recovery start up business. For each one of their employees, wages up to $10,000 can be counted to determine the amount of the 50% credit.
There are a number of qualifications which a business must meet in order to be eligible for the ERC tax credit. Listed below are the two main requirements from the business’s standpoint, one of which a business must meet in order to be eligible.
- the full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19
- a significant decline in gross receipts
If an organization is meeting the second listed requirement, the IRS defines a gross decline in receipts to begin and end as follows. For all of the IRS requirements and details regarding the Employee Retention Credit visit the page on the IRS website.
- Significant Decline in Gross Receipts Begins
- on the first day of the first calendar quarter of 2020
- for which an employer’s gross receipts are less than 50% of its gross receipts
- for the same calendar quarter in 2019.
- Significant Decline in Gross Receipts Ends
- on the first day of the first calendar quarter following the calendar quarter
- in which gross receipts are more than of 80% of its gross receipts
for the same calendar quarter in 2019.
As the ERC was rolled out to support businesses during the Covid-19 pandemic, Payroll Service Solutions was here to assist clients to ensure they were able to take full advantage of those benefits which were listed. The Covid-19 pandemic was an event which no organization was prepared for, however; having a partner such as Payroll Service Solutions to rely on during changing times can be invaluable when the unexpected happens. Payroll Service Solutions will continue to assist clients in navigating the fall out of the Covid-19 pandemic as well as any of the next challenges which may appear.